BLBG: Crude Oil Rises as Weaker Dollar Spurs Demand From Investors
Crude oil gained in New York after the U.S. currency retreated against the euro, spurring investor demand for dollar-priced commodities.
The euro rose for a second day against the dollar, reaching $1.3203 at 1:49 p.m. in Tokyo as concerns eased over financial losses in Europe after Barclay Plc’s announcement yesterday that it won’t seek further capital. The Organization of Petroleum Exporting Countries may need to cut production by a further 4 million barrels a day, Venezuelan President Hugo Chavez said.
“The major reason behind oil’s sudden gain is the weak dollar against the euro,” said Masahiko Sato, a senior analyst at OvalNext Corp. in Tokyo. “The setback in the dollar encouraged some investors to buy crude during Asia’s sluggish Lunar New Year holiday trading.”
Crude oil for March delivery rose as much as 65 cents, or 1.4 percent, to $46.38 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $46.33 at 1:45 p.m. Tokyo time.
In New York yesterday, crude oil futures fell 74 cents, or 1.6 percent to settle at $45.73 a barrel.
Markets in most Asian countries, except Japan, were closed for a second day for the Lunar New Year holidays.
OPEC agreed last month to cut output by 9 percent to 24.845 million barrels a day starting Jan. 1 to prevent a glut and stem falling prices. PetroLogistics forecast Jan. 23 that OPEC production would average 26.15 million barrels a day in January.
Chavez Vow
Chavez said the Venezuelan oil basket has averaged $35.85 this year, well below the budgeted $60 a barrel, according to an e-mailed statement from the information ministry.
“If necessary, we’ll cut 4 million barrels more of production, but we’re not going to allow oil prices to drop to $6 a barrel again,” Chavez said.
OPEC, responsible for about 40 percent of world supplies, is cutting output 5 percent this month, according to Geneva-based consulting company PetroLogistics Ltd.
Oil on the Nymex touched $32.40 a barrel on Dec. 19, the lowest since February 2004.
“Better-than-expected U.S. economic indicators overnight were another driving force behind the oil gains,” said Sato of OvalNext.
A report from the National Association of Retailers showed that sales of previously owned U.S. homes unexpectedly climbed from a record low, spurring hopes for a stronger economy.
Brent crude oil for March settlement gained as much as 44 cents, or 0.9 percent, to $47.40 a barrel on London’s ICE Futures Europe exchange, and was trading at $47.32 at 1:30 p.m. in Tokyo.
In Australia, a tropical cyclone forced BHP Billiton Ltd., Woodside Petroleum Ltd. and several others to halt more than half of Australia’s oil output.
BHP closed the Stybarrow and Griffin fields off the northwest coast, while Perth-based Woodside halted production at the Vincent, Enfield and Cossack fields, the companies said today. Apache Corp. and Adelaide-based Santos Ltd. also halted ventures, taking the total reported closures to about 265,000 barrels a day of oil and condensates.
