BLBG : Oil Rises Above $72 as Dollar Weakens to Lowest Level This Year
Sept. 9 (Bloomberg) -- Crude oil rose above $72 a barrel as the dollar dropped to the lowest level against the euro this year before OPEC’s scheduled announcement today that its members will maintain output targets.
Oil added to yesterday’s gain of 4.5 percent in New York as the falling U.S. currency spurred investors’ demand for dollar- priced assets to hedge against inflation. The Organization of Petroleum Exporting Countries should maintain existing output quotas and improve compliance when it meets, the group’s production-monitoring committee recommended late yesterday.
“The oil market is going to remain focused on the dollar and what other commodities do,” said Phil Flynn, vice president of research at PFGBest, a Chicago-based brokerage. “We are all expecting OPEC to celebrate where prices are and pay lip service to better compliance in the future.”
Crude oil for October delivery rose 96 cents, or 1.4 percent, to $72.06 a barrel at 10:10 a.m. on the New York Mercantile Exchange. Futures reached $72.25, the highest since Aug. 31. Prices are up 62 percent this year.
The U.S. currency dropped 0.8 percent to $1.4588 per euro from $1.4478 yesterday. It touched $1.4594, the weakest since Dec. 18.
“Commodities that are priced in dollars are looking a lot more attractive,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The market is poised to move higher in anticipation that demand will increase because of the improving economy and due to normal seasonal gains that occur during the Northern Hemisphere winter.”
Global fuel consumption peaks during the Northern Hemisphere winter.
OPEC Targets
OPEC members have said the 12-member group should keep its output target unchanged at 24.845 million barrels a day when it gathers today in Vienna.
“We need more compliance” with existing production targets, Kuwaiti Oil Minister Sheikh Ahmed al-Abdullah al-Sabah told reporters today in Vienna. “I don’t foresee any cut,” he said, when asked at what price level the group might consider a further supply reduction.
All of the 26 analysts surveyed by Bloomberg News predicted the organization will keep quotas steady.
OPEC’s Ministerial Monitoring Committee met for an hour late yesterday at the group’s Vienna headquarters to review data on OPEC oil supply and demand. The MMC, comprising officials from Iran, Nigeria and Kuwait, often recommends a course of action for the full meeting of OPEC ministers, which convenes at 9:30 p.m. local time, after dark because the summit falls in the Muslim holy month of Ramadan.
Brent crude oil for October settlement rose $1.21, or 1.7 percent, to $70.63 a barrel on the London-based ICE Futures Europe exchange.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net
