MW: Oil futures rise above $71 a barrel as dollar weakens
SAN FRANCISCO (MarketWatch) -- Oil futures rose above $71 a barrel Tuesday, part of a broad commodities rally supported by a tumbling U.S. dollar.
Crude oil for November delivery gained $1.42, or 2.1%, to $71.83 a barrel in electronic trading on Globex. The contract earlier hit an intraday high of $71.96 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 76.21, -0.44, -0.57%) , which tracks the performance of the greenback against a basket of other major currencies, fell more than 0.4% to 76.27 from 76.668 late Monday. See Currencies.
Weighing on the greenback, a report in Britain's Independent newspaper said Gulf oil producers, in concert with China, Russia, Japan and France, are planning to end pricing oil in U.S. dollars. See full story.
Gold futures shot to a new record. The December contract was recently $22.80, or 2.2%, higher at $1,041 an ounce. See Metals Stocks.
The commodities rally buoyed the U.S. stock market. Energy and materials stocks led the S&P 500 (SPX 1,059, +18.52, +1.78%) , which rose 1.4% to 1,055 points.
Dollar weakness typically boosts dollar-denominated commodities such as oil because it makes them cheaper for holders of other currencies.
Natural gas sat out the day's rally, however.
November natural-gas futures slid 2 cents, or 0.5%, to $4.962 per million British thermal units.
Energy traders are now waiting for 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 3 cents to $1.79 a gallon and November heating oil gained 4 cents to $1.83 a gallon.
Oil prices had 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."
