MW: Oil futures rise above $71 a barrel as dollar weakens
By Polya Lesova,
FRANKFURT (MarketWatch) -- Oil futures rose above $71 a barrel early Tuesday, as the dollar fell against major currencies, luring traders into the energy market.
Crude oil for November delivery gained 73 cents, or 1%, to $71.14 a barrel in electronic trading on Globex. The contract earlier hit an intraday high of $71.63 a barrel.
"Oil prices continue to rise, as stock markets rally and a weaker U.S. dollar lifts the appeal of oil for investors," said analysts at Action Economics.
The dollar index (DXY 76.30, -0.34, -0.45%) , which tracks the performance of the greenback against a basket of other major currencies, fell 0.3% to 76.391.
Dollar weakness typically boosts dollar-denominated commodities such as oil because it makes them cheaper for holders of other currencies.
Oil prices finished slightly higher on Monday after an upbeat survey of the U.S. services sector lifted hopes of economic recovery.
The Institute for Supply Management said its index of the services industry rose to 50.9% in September, the highest level since May 2008 and topping analysts' consensus of 50%.
Edward Meir, analyst at MF Global, warned, however, that "the macro environment remains sufficiently weak that it will limit excessive rallies in a number of commodity complexes, including crude."
Energy traders are awaiting data on petroleum inventories.
The American Petroleum Institute will release its latest update on Tuesday afternoon Eastern time. The Energy Information Administration will report its more closely watched inventory data on Wednesday morning.
Analysts polled by Platts expect a build of 1.9 million barrels in crude inventories for the week ended Oct. 2. They also project an increase of 1.3 million barrels in gasoline stocks and a build of 400,000 barrels in distillate supplies.
Also on Globex, November reformulated gasoline rose 1 cent to $1.77 a gallon and November heating oil gained 2 cents to $1.81 a gallon.
November natural-gas futures rose 9 cents, or 1.8%, to $5.08 per million British thermal units.
