BLBG:Oil Advances as Weaker Dollar Increases Appeal of Commodities
Crude oil gained as the U.S. dollar weakened, boosting the appeal of commodities as a currency hedge.
Oil rose as the dollar dropped the most in a week against the euro on speculation the U.S. economy will worsen. A report today is forecast to show that the U.S. lost the most jobs since 1949. The Organization of Petroleum Exporting Countries will reduce crude-oil shipments by 1.9 percent in the month ending March 21, according to tanker-tracker Oil Movements. OPEC is due to meet on March 15.
“The weakening dollar is adding some support this morning, as is a decent show of compliance by OPEC,” said Robert Montefusco, a broker at Sucden Financial in London. “The market is in wait-and-see mode until the non-farm payrolls come out.”
Crude oil for April delivery gained as much as $1.15, or 2.6 percent, to $44.76 a barrel in electronic trading on the New York Mercantile Exchange. It was at $44.13 a barrel at 1:21 p.m. London time. Futures fell $1.77 yesterday to settle at $43.61 a barrel.
New York prices traded above London’s Brent for the first time since Dec. 11 after stockpiles where the U.S. benchmark is delivered declined for a third week.
Brent crude oil for April settlement traded at $44.05 a barrel on London’s ICE Futures Europe exchange, 5 cents lower than its New York equivalent.
Employers in the U.S. cut payrolls by 650,000 and the unemployment rate probably surged to a 25-year high of 7.9 percent, according to a Bloomberg survey before today’s Labor Department report.
Cushing Inventories Fall
Stockpiles at Cushing, Oklahoma, where New York-traded West Texas Intermediate crude is delivered, declined 553,000 barrels to 34 million barrels last week, a Department of Energy report showed. Inventories in the week ended Feb. 6 were the highest since at least April 2004, when the department began keeping records for the location.
OPEC members will load 22.67 million barrels a day in the four weeks ending March 21, down from 23.1 million a day in the month ended Feb. 21, the Halifax, England-based Oil Movements said yesterday.
The producer group cut output by 2.7 percent in February, a Bloomberg News survey showed. OPEC’s production averaged 27.78 million barrels a day last month, down 770,000 from January, according to the survey of oil companies, producers and analysts.
OPEC agreed Dec. 17 on output caps to reduce supplies in January by 2.2 million barrels a day from December levels. That followed pledges to remove 2 million barrels a day in the fourth quarter of last year.
