MW: Oil rises on hurricane worries, dollar weakness
NEW YORK (MarketWatch) -- Crude futures rose above $78 a barrel on Monday, as Hurricane Ida headed towards the Gulf of Mexico, raising worries over oil and gas installations in the area.
Also pushing oil higher, the dollar fell against most other major currencies, further raising the investment appeal of dollar-denominated commodities such as oil and gold.
Crude oil for December delivery gained $1.02, or 1.3%, to $78.45 a barrel in early North American electronic trading. It earlier climbed to an intraday high of $78.95 a barrel.
Hurricane Ida weakened slightly and is now a Category 1 hurricane, with additional weakening forecast over the next 24 hours, the U.S. National Hurricane Center said in an advisory on Monday. Maximum sustained winds have decreased to near 90 miles per hour.
However, a hurricane warning remains in effect for the northern Gulf Coast. Ida is expected to move across the Gulf of Mexico on Monday and approach the northern Gulf Coast tonight or early Tuesday.
"Concerns over the systems are pushing prices higher," said Edward Meir, an analyst at MF Global, in a note. "But we are not sure the gains will hold given that the system is expected to weaken once it heads towards the oil and gas facilities in the Gulf."
"More importantly, it should be noted that the hurricane season is approaching its end, capping what has been a remarkably quiet several weeks."
"So far no large impact on oil prices is expected due to the very high volumes in storage on and offshore," analysts at Vienna-based JBC Energy GmbH wrote.
Dollar weakness also supported oil prices on Monday. The dollar index (DXY 75.04, -0.63, -0.83%) , which tracks the performance of the greenback against a basket of other major currencies, fell 0.9% to 75.158. See Currencies.
Oil futures fell nearly 3% on Friday after data showed the U.S. unemployment rate climbed to 10.2% in October, topping the 10% mark for the first time in 26 years.
Nonfarm payrolls dropped by 190,000 in October, bringing the total number of jobs lost in the recession to 7.3 million.
Despite Friday's decline, oil prices ended the week up 0.6%. They have climbed 76% this year.
Elsewhere in energy trading, December gasoline gained 2.9 cents, or 1.5%, to $1.9524 a gallon, December heating oil added 2.24 cents, or 1.1%, to $2.025 a gallon.
December natural gas lost 8.3 cents, or 1.8%, to $4.51 per million British thermal units.
In other futures, December gold futures extended their recent surge on Monday, climbing to an intraday high of $1,109.40 an ounce. See Metals Stocks.
The United States Oil Fund (USO 40.76, +1.06, +2.67%) rose 2.1%, and the United States Natural Gas Fund (UNG 9.43, -0.10, -1.05%) slid 0.6%.
