MW: Crude gains as dollar softens, stock futures rally
Natural gas also on the rise, up 3% in electronic trading
NEW YORK (MarketWatch) -- Crude-oil futures gained more than 3% early Monday, regaining the $50-a-barrel mark and then some, as traders played off weakness in the dollar as well as the U.S. government's rescue plan for ailing financial-services giant Citigroup.
Crude for January delivery rose $1.77, or 3.6%, to $51.67 a barrel in electronic trading on Globex. The contract hit an intraday high of $52.09 a barrel.
"Surging stock markets this morning following the rescue plan for troubled Citigroup have lifted sentiment and in the process lifted crude prices this morning," said Nimit Khamar, analyst at Sucden Research, in a note.
"Oil markets have also been supported by the depreciating dollar on a trade-weighted basis and the increasing prospect of an OPEC supply cut," Khamar said.
On Friday, crude futures rose 51 cents to end at $49.93 a barrel on the New York Mercantile Exchange. For the week, however, crude futures fell fully $7.67 -- a 13% drop.
In equities, U.S. futures pointed to carryover gains after Wall Street rallied late Friday, with Citigroup set to rise after the government injected $20 billion as part of a rescue package. See Indications.
Late Sunday, the government agreed to rescue the ailing financial giant with a plan that calls for a $20 billion capital infusion and guarantees for as much as $306 billion of troubled assets as well as government control of executive bonuses and limits on dividend payments. Read more.
In the currency markets, the dollar got overshadowed by heightened worries over the state of the financial sector. The dollar index , a measure of the greenback against a trade-weighted basket of six major currencies, fell 0.7% to 86.66. See Currencies.
Dollar weakness typically spells gains in prices of dollar-denominated commodities such as gold and oil, because they're cheaper for holders of other currencies.
OPEC meeting
Traders are awaiting upcoming meetings of the Organization of Petroleum Exporting Countries. The oil cartel will meet on Nov. 29 in Egypt and again on Dec. 17 in Algeria.
Venezuela's Oil Minister Rafael Ramirez said Sunday the cartel should reduce production by 1 million barrels a day at its Nov. 29 meeting, adding that the cuts should take effect before the end of the year, according to media reports.
Separately, Reuters reported that Iran's OPEC governor Mohammad Ali Khatibi said Monday that the cartel should cut output further since previous supply cuts have not been successful in halting the big slide in prices.
"Gains have been limited as many market participants fear the magnitude of any OPEC cut will not be enough to counter the bearish sentiment and the fall in demand, which is continuing to deteriorate," Khamar said. The cartel needs to show its willingness to continue cutting output in line with falling demand if it wants to stabilize prices, he said.
Also on Globex Monday, January reformulated gasoline rose 1 cent to $1.10 a gallon and January heating oil gained 2 cents to $1.73 a gallon.
Natural gas for December delivery rallied 20 cents, or 3%, to $6.68 per million British thermal units.
