Oil rises above $76 amid dollar's decline

AP News
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Posted: Nov 25, 2009 7:05 AM

Oil prices rose above $76 a barrel Wednesday as the dollar weakened and investors awaited data on the U.S. economy and crude inventories.

By early afternoon in Europe, benchmark crude for January delivery was up 39 cents to $76.41 in electronic trading on the New York Mercantile Exchange. The contract fell $1.54 to settle at $76.02 on Tuesday.

Crude has fallen about 7 percent since reaching its high this year of $82 a barrel last month amid evidence that economic recovery in the U.S. will be tepid.

Earlier Wednesday in Asia, the price fell as low as $75.78 on the eve of Thanksgiving holiday in the United States.

"Today could be a volatile trading day due to the long weekend, the end of the month and the end of the financial year for some traders," Petromatrix Research said in a report, adding that "the momentum is gently starting to become negative."

Crude is testing the bottom of a monthlong trading range of between $76 a barrel and $82, and some energy analysts, such as Ritterbusch and Associates in Galena, Illinois, say prices could fall to $70 a barrel during the next month.

Other analysts, however, expect prices to rebound as investors seek an inflation hedge amid a weakening U.S. dollar. Bank of America Merrill Lynch forecast an average price of $85 a barrel next year.

"Loose monetary policy and a weaker dollar should put upward pressure on crude oil prices next year," the bank said in a report.

The Energy Information Administration was to announce its inventory report later Wednesday. Analysts expected it to show a jump in crude stocks. U.S. crude demand appears to be stagnant as oil supplies keep growing.

U.S. data on jobs, consumer spending and new home sales which could provide a clearer picture of the economic recovery also were due later Wednesday.

The U.S. Commerce Department on Tuesday revised down third-quarter gross domestic product growth to 2.8 percent from 3.5 percent, a disappointing result since economies emerging from recessions often see larger expansions.

The euro bought $1.5041 in morning European trading, up from $1.4975 late in New York on Tuesday. The British pound rose to $1.6692 from $1.6593 late in New York, while the dollar dropped to purchase 87.72 Japanese yen from 88.56 the night before.

In other Nymex trading, heating oil was up 0.97 cent to $1.96 a gallon. Gasoline for December delivery was 0.5 cent higher at $1.94 a gallon.

In London, Brent crude for January delivery rose 56 cents to $77.02 on the ICE Futures exchange.

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Associated Press writer Alex Kennedy in Singapore contributed to this report.