Wednesday, October 20, 2010

Crude Oil Surges on Decline in Dollar, Smaller Than Projected Supply Gain

Crude oil climbed as the dollar tumbled to a 15 year low against the yen and a government report showed a smaller than forecast gain in U.S. stockpiles. Oil increased as much as 2.6 percent as the U.S. currency fell on concern the Federal Reserve’s regional business survey will show a slowing economic recovery. A weaker dollar bolsters the appeal of commodities to investors. An Energy Department report showed that supplies rose 667,000 barrels last week, less than half what was projected in a Bloomberg News survey.

“It’s all the dollar,” said Richard Ilczyszyn, a market strategist at Lind-Waldock, a broker in Chicago. The dollar will probably remain weak until after the Federal Reserve meeting and the congressional elections in November, he said. Crude oil for November delivery rose $1.90, or 2.4 percent, to $81.39 a barrel at 12:07 p.m. on the New York Mercantile Exchange. Oil traded at $80.18 a barrel before the release of the inventory report at 10:30 a.m. in Washington.

The November contract expires today. More active December futures increased $1.82, or 2.3 percent, to $81.98. Brent crude oil for December settlement gained $1.91, or 2.4 percent, to $83.01 a barrel on the London based ICE Futures Europe exchange. Futures in New York tumbled 4.3 percent yesterday, the biggest drop since Feb. 4, after an unexpected rate increase by China’s central bank raised speculation that fuel demand will drop in the world’s biggest energy-consuming country......Read the entire article.

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