Dec. 3 (Bloomberg) -- Crude oil rose above $77 a barrel in New York as the dollar weakened, spurring investor demand for commodities to hedge against inflation.
Oil rebounded after losing 2.3 percent yesterday as the U.S. Energy Department reported that crude stockpiles swelled to their highest level since August. The dollar slipped as indications the global economy is recovering stimulated demand for higher-yielding assets.
“The dollar is the single most important factor in the market,” said Eugen Weinberg, senior commodities analyst at Commerzbank AG in Frankfurt. “It’s not the fundamentals. The weaker dollar is a really big concern for many investors and they try to protect themselves by buying into commodities.”
Crude oil for January delivery rose as much as 90 cents, or 1.2 percent, to $77.50 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $77.16 a barrel at 11:13 a.m. in London. Prices have gained 73 percent this year.
An Institute for Supply Management index of non- manufacturing businesses, which make up the largest part of the U.S. economy, will rise to 51.5 in November from 50.6 in October, according to a Bloomberg News survey before today’s report. The U.S. currency dropped to $1.5123 per euro at 10:51 a.m. in London, from $1.5044 yesterday in New York. Gold hit a record for a third day, touching $1,226.56 an ounce.
Crude Stockpiles
Commercially held U.S. crude oil inventories rose 2.09 million barrels to 339.9 million, the highest level since August, the Energy Department report showed. Stockpiles were forecast to decline by 400,000 barrels, according to the median estimate from analysts surveyed by Bloomberg News.
Gasoline supplies climbed 4 million barrels to 214.1 million as imports hit a 14-week high, the Energy Department said. Distillate fuel inventories fell 1.17 million barrels to 165.7 million, 29.9 percent above the five-year average level.
“Demand indications for November-to-date remain firm for gasoline, greatly improved for jet, but are still very sluggish for other distillates,” analysts at Barclays Capital, led by Paul Horsnell, said in a report after the Energy Department data.
Total U.S. daily fuel demand averaged 18.5 million barrels in the four weeks ended Nov. 27, down 3.2 percent from a year earlier, the Energy Department said. Consumption slipped by 497,000 barrels a day last week.
Rising consumption outside the U.S., particularly in China and India, may push oil prices to an average of $90 a barrel next year, compared with $61 this year, UBS AG’s wealth management group told reporters today in Singapore.
Brent crude oil for January settlement rose as much as $1.03, or 1.3 percent, to $78.91 a barrel on the London-based ICE Futures Europe exchange. The contract was at $78.67 a barrel at 11:13 a.m. in London.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
