Oil prices near $79 on US hurricane, weaker dollar

AP News
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Posted: Nov 09, 2009 8:05 AM

Oil prices climbed toward $79 a barrel Monday as Hurricane Ida threatened oil installations in the Gulf of Mexico and the dollar weakened against other currencies.

By early afternoon in Europe, benchmark crude for December delivery was up $1.17 to $78.60 a barrel in electronic trading on the New York Mercantile Exchange.

Ida, the first Atlantic hurricane to approach the United States this year, headed toward the Gulf Coast on Monday with 105 mph (169 kph) winds, and could make landfall as early as Tuesday.

Crude was also boosted by a falling U.S. dollar, which has moved inversely to oil for months as investors buy commodities as a hedge against inflation and a weaker U.S. currency. Oil rose to $82 last month, its 2009 high, from $32 in December.

The euro rose to $1.4984 in European trading Monday from $1.4885 on Friday and the British pound also rose to $1.6795 from $1.6602. The dollar fell to 89.86 Japanese yen from 89.93 yen.

On Friday, crude fell $2.19 to settle at $77.43 after the U.S. Labor Department said the unemployment rate jumped more than expected in October to 10.2 percent, the highest since 1983.

The dismal jobless data stirred concerns that U.S. consumer demand will remain sluggish despite signs pointing to an economic recovery, while analysts remained skeptical about the rise of oil prices in the past months.

"In the real world there is very little evidence that the underlying market fundamentals, both in the overall economy and more particularly in the oil market, are improving fast enough to justify these price levels," said analysts at KBC Market Services in Britain.

Investors will be eyeing third-quarter earnings reports this week from retailers such as Wal-Mart Stores Inc., Abercrombie & Fitch Co., Macy's Inc. and JC Penney Co. for clues about the strength of consumer spending.

In other Nymex trading, heating oil rose 2.90 cents to $2.0325 a gallon. Gasoline for December delivery gained 3.08 cents to $1.9551 a gallon. Natural gas for December delivery lost 2.1 cents to $4.574 per 1,000 cubic feet.

In London, Brent crude for December delivery rose $1.11 to $76.98 on the ICE Futures exchange.

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