MW: Oil rises on upbeat economic data as dollar falls
By Myra P. Saefong and V. Phani Kumar, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures climbed 3% Tuesday, finding support from a decline in the U.S. dollar as upbeat economic data from the U.S. and Germany helped brighten the outlook for oil demand.
The January contract for light, sweet crude oil CL2F +3.54% climbed $2.88, or 3.1%, to $96.76 a barrel on the New York Mercantile Exchange.
The contract will expire at the close Tuesday. February crude will become the front-month futures contract.
At last check, February crude CL2G +3.51% was up $2.87, or 3.1%, at $96.92 a barrel.
“Developments in Europe were better than expected, with a German business survey improving from a month ago and a Spanish debt auction going well,“ said Tim Evans, an energy analyst at Citi Futures Perspective, in a note.
The Ifo Institute’s German business-climate index for December climbed to 107.2 from 106.6 in the prior month.
Over in the U.S., housing starts rose 9.3% in November to a seasonally adjusted rate of 685,000 — the highest annual rate since April 2010. Read more about housing starts.
The U.S. and German data helped lift the euro and get the equities moving higher, said Evans. Stocks in the U.S. and Europe were mostly higher Tuesday, with the Dow Jones Industrial Average DJIA +2.35% up 2.2% at last check.
The rally in the U.S. stock market helped lure investors away from the dollar, sending the dollar index DXY -0.86% , which measures the greenback against a basket of six currencies, down to 79.650 from 80.374 late Monday. Read more on currencies.
A weaker dollar makes dollar-denominated commodities less expensive for holders of other currencies.
Oil also found support after U.S. Defense Secretary Leon Panetta said Iran could build a nuclear weapon within a year, prompting a “whatever is necessary” response from the U.S., Evans said. That raised concerns about global oil supply disruptions.
Oil’s gains Tuesday come on top of a 35-cent improvement in regular trading on Nymex Monday that snapped a three-day losing streak for the commodity.
Among the energy products, the January heating oil contract HO2F +2.94% rose 7 cents, or 2.6% to $2.85 a gallon and gasoline futures for the same month RB2F +3.32% rose 8 cents, or 3.1%, to $2.56 a gallon.
Energy traders awaited weekly supply data from the American Petroleum Institute due out later Tuesday.
The figures come ahead of a much-anticipated weekly update from the Energy Information Administration on Wednesday.
Analysts polled by Platts expect the data to show that crude-oil stocks fell by 2.25 million barrels for the week ending Dec. 16. They also forecast a rise of 1.75 million-barrel in gasoline supplies and a decline of 600,000 barrels in distillate inventories.
January natural gas futures NG12F +0.48% , meanwhile, climbed 1 cent, or 0.3% to $3.11 per million British thermal units ahead of EIA supply data due Thursday.
