By Claudia Assis and Nick Godt, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures advanced more than 1% Tuesday, as the dollar dropped and investors embraced risk as the Federal Reserve started a key two-day meeting.
Crude for December delivery (CLZ10 83.73, +0.78, +0.94%) gained 92 cents to $83.86 a barrel on the New York Mercantile Exchange.
A close near this level would be the highest for a most-active contract in two weeks.
Providing support for commodities, the dollar fell against most major currencies. The dollar index (DXY 76.81, -0.48, -0.62%) , which measures the U.S. unit against a basket of six major currencies, was down 0.6%. See more on dollar’s latest weakness against the euro and other currencies.
Investors widely expect Fed officials to detail more monetary-easing steps on Wednesday. Expectations of another round of bond purchases have kept the dollar under pressure since late August and has provided a boost for commodities.
On Monday, crude rallied nearly 2%, as data showing manufacturing expansions in China and the U.S. lent support to hopes for higher oil demand.
Also on Monday, Saudi Arabia’s oil minister signaled that oil prices are in a comfortable zone between $70 and $90 a barrel. Oil has spent the better part of the year in a range between $70 and $80.
The minister’s comments are likely to “aid in the consolidation of prices in the $80 to $90 range,” analysts at Barclays Capital said in a report to clients Tuesday.
Higher prices are likely to be tested Tuesday when traders get a glimpse of inventories. The American Petroleum Institute is slated to release its supply data later in the day. The trade group’s report comes ahead of a more closely watched update from the Department of Energy.
Analysts polled by Platts expect crude-oil supplies to increase 2 million barrels in the week ended Oct. 29. Gasoline stocks are seen rising 1.1 million barrels. Stocks of distillates, which include diesel and heating oil, are forecast to decline 900,000 barrels.
Meanwhile, natural-gas futures recouped some of their recent losses, with the December contract (NGZ10 3.91, +0.08, +2.11%) rising 5 cents, or 1.2%, to $3.88 per million British thermal units.
The contract slumped more than 5% Monday. The fuel has been under pressure as growing production continues to pull prices down. In the short term, analysts expect the first half of November to be warmer than normal, chipping away at heating needs.
