Oil prices rose to above $80 a barrel Wednesday, helped by the weaker dollar and an unexpected drop in U.S. crude supplies which suggested demand may be picking up.
By early afternoon in Europe, benchmark crude for December delivery was up 84 cents to $80.44 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained $1.47 to settle at $79.60 on Tuesday.
U.S. oil inventories dropped last week, the American Petroleum Institute said late Tuesday. Crude stocks fell 3.3 million barrels while analysts had expected a rise of 1.3 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
The Energy Information Administration is scheduled to release its supply data later on Wednesday.
Crude has fallen from its 2009 high of $82 a barrel last month on investor doubts about the strength of the U.S. economy. Some analysts say the oil price could fall further if a monthly U.S. unemployment report on Friday confirms the number of jobless continues to swell.
“We still feel that a decline toward the $75 area could be forthcoming as this week proceeds,” Galena, Illinois-based Ritterbusch and Associates said in a report.
Others agreed, tying oil’s current rally to speculative investments linked to the rise in the price of gold, which neared $1,100 an ounce on large purchases by the central bank of India.
“The underlying problem for crude remains the same — it needs demand in the physical world to be a closer match to the demand in the financial world,” said Olivier Jakob of Petromatrix in Switzerland.
Analysts have also noted the usual correlation between the dollar and oil prices, with oil becoming cheaper and more attractive to international investors when the dollar falls.
The euro bought $1.4765 on Wednesday, up from $1.4702 late Wednesday in New York. The British pound also rose, to $1.6520 from $1.6402.
In other Nymex trading, heating oil rose 1.34 cents to $2.0867 a gallon. Gasoline for December delivery advanced 1.65 cents to $2.0169 a gallon. Natural gas for December gained 4 cents to $4.962 per 1,000 cubic feet.
In London, Brent crude for December delivery rose 76 cents to $78.87 on the ICE Futures exchange.
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Associated Press writer Alex Kennedy in Singapore contributed to this report.
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<img src=" http://www.joplinglobeonline.com/images/zope/wednesday.gif" border=0> Oil up above $80 on weak dollar, lower inventories
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