WSJ: OIL FUTURES: Nymex Crude Turns Positive On Weaker Dollar
By Brian Baskin Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Crude futures turned positive Tuesday as a weak dollar and Enbridge Inc.'s (ENB) shut pipeline supported oil prices.
Light, sweet crude for October delivery traded 56 cents, or 0.7%, higher at $77.75 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 60 cents, or 0.8%, higher at $79.63 a barrel.
Futures shook off minor early losses after the ICE Dollar Index, measuring the greenback against a basket of currencies, hit a one-month low of 81.585. That made oil cheaper to buy using other currencies.
Potential buyers were already primed to enter the market by the continued shutdown of Enbridge's Line 6a pipeline, which can carry up to 670,000 barrels a day of Canadian crude to U.S. refiners. Enbridge stopped the pipeline on Thursday after discovering a leak, and has not given a restart date. The discovery of another leak on a smaller pipeline once again focused the market's attention on U.S. supplies.
"To me it just makes it seem less likely that they're going to restart 6a anytime soon," said Tom Bentz, a broker and analyst with BNP Paribas Commodity Futures Inc.
While U.S. oil inventories are still well above normal, the potential for a long-term disruption has kept prices from falling even when mixed economic indicators create uncertainty about future oil demand.
Oil prices had initially fallen Tuesday after the ZEW economic research institute cut its closely watched expectations index for Germany's economy to -4.3 in September, from 14.0 in August. The index represents a "flattening" of the German economy, Europe's largest.
The index served as a reminder that not all large economies are growing at the rate of China's, where a 13.9% year-on-year jump in August industrial production sent crude futures as high as $78.04 a barrel on Monday.
However, the relatively small decline in oil prices after such big gains made it clear that the economic optimists are still directing trading.
"While we remain skeptical the market's fundamentals can hold prices at these levels, buyers seem particularly emboldened just now," wrote Mike Fitzpatrick with MF Global.
Front-month October reformulated gasoline blendstock, or RBOB, recently traded 1.37 cents, or 0.7%, higher at $1.9943 a gallon. October heating oil traded 2.25 cents, or 1.1%, higher at $2.1452 a gallon.
-By Brian Baskin, Dow Jones Newswires; 212-416-2453; brian.baskin@dowjones.com.