Oil prices crept above $77 a barrel Friday as the weaker dollar, which makes crude cheaper for international investors, offset doubts about U.S. crude demand.
By early afternoon in Europe, benchmark crude for December delivery, which earlier fell to as low as $76, was up 48 cents to $77.42 a barrel in electronic trading on the New York Mercantile Exchange. The contract gave up $2.34 to settle at $76.94 on Thursday.
The U.S. Energy Information Administration said Thursday in its weekly report that oil inventories rose 1.8 million barrels and gasoline stocks grew 2.5 million, both larger-than-expected increases.
Oil has bobbed between $76 and $82 for the last month as traders consider how much a high U.S. unemployment rate, which rose to 10.2 percent in October, will drag on consumer demand for crude products such as gasoline.
“I don’t think demand will pick up until the economy starts creating jobs,” said Clarence Chu, a trader at market maker Hudson Capital Energy in Singapore.
Oil prices are also at the mercy of the dollar’s exchange rate, with speculative trades often outweighing news about the fundamentals of supply and demand.
“We would like to think that weakness on the Nymex could be attributable to the (inventory) report,” said The Schork Report edited by U.S. trader and analyst Stephen Schork. “Rather, (Thursday’s) sell-off likely had more to do with the strength in the dollar and corresponding weakness in U.S. equities, than it did on some bearish fundamental report. Such is the state of oil trading nowadays.”
On Friday, the euro gained slightly against the dollar after Germany reported that growth in its economy, Europe’s biggest, accelerated in the third quarter.
The euro bought $1.4889, up from $1.4866 late Thursday in New York, while the British pound climbed to $1.6675 from $1.6570 and the dollar slipped to 89.82 Japanese yen from 90.32 yen.
“Oil prices have not really been trading on fundamental inputs since the beginning of October, hence more than anything we will continue to focus on the correlation to the euro-dollar and the sentiment in equities,” said analyst Olivier Jakob of Petromatrix in Switzerland.
Last month, crude broke through a $65-$75 range that it had been in for most of the summer on signs the economy was recovering. Some analysts expect crude to stay above that range going into 2010.
“The immediate floor to prices has been moving up, beyond $70 per barrel and perhaps as high as $75 per barrel,” Barclays Capital said in a report. “Market dynamics have returned to being a fairly relaxed chess game.”
In other Nymex trading, heating oil rose 1.59 cent to $2.0069 a gallon. Gasoline for December delivery gained 1.72 cents to $1.9577 a gallon. Natural gas for December delivery jumped 4.7 cents to $4.417 per 1,000 cubic feet.
In London, Brent crude for December delivery rose 70 cents to $76.72 on the ICE Futures exchange.
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Associated Press writer Alex Kennedy in Singapore contributed to this report.
Business
<img src=" http://www.joplinglobeonline.com/images/zope/friday.gif" border=0> Oil creeps above $77 amid US demand concerns
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