Crude oil rose as the dollar tumbled against most major currencies on speculation the Federal Reserve will curb the greenback?s value by buying government debt.
Oil climbed 0.3 percent as the dollar fell against the euro for the first time in three days, bolstering the appeal of commodities. Initial U.S. jobless claims unexpectedly dropped 21,000 to a three-month low of 434,000 last week, signaling the labor market may be on the mend.
?Commodities are real assets that hold their value even as the dollar declines,? said Chris Barber, a senior analyst at Energy Security Analysis Inc. in Wakefield, Massachusetts. ?Commodities are finite compared with the amount of dollars that can be printed.?
Crude oil for December delivery rose 24 cents to settle at $82.18 a barrel on the New York Mercantile Exchange. Futures are up 6.1 percent from a year ago.
Brent crude oil for December settlement increased 36 cents, or 0.4 percent, to $83.59 a barrel on the London-based ICE Futures Europe exchange.
Estimates for the size of the asset-purchase program range from $1 trillion at Bank of America-Merrill Lynch to $2 trillion at Goldman Sachs Group Inc. Economists at both firms agree the Fed will probably start by announcing a $500 billion plan after a meeting on Nov. 2 and Nov. 3.
The U.S. currency slumped as much as 1.3 percent to $1.3946 against the euro before trading at $1.3928 at 3:13 p.m. The S&P 500 increased 0.1 percent to 1,183.38 and the Dow Jones Industrial Average decreased 14.57 points, or 0.1 percent, to 11,111.71.
Commodity Rally
The Thomson Reuters/Jefferies CRB Index of 19 raw materials advanced 0.3 percent to 299.89. Twelve of the commodities gained, six declined and one was unchanged. Gold futures for December delivery increased $19.90, or 1.5 percent, to settle at $1,342.50 an ounce on the Comex in New York.
U.S. gross domestic product rose at a 2 percent annual pace in the third quarter, up from a 1.7 percent rate in the previous three months, based on the median forecast in a Bloomberg News poll of economists before a Commerce Department report tomorrow.
?The markets are wildly choppy,? said Bill O?Grady, chief market strategist at Confluence Investment Management in St. Louis. ?Oil traders are looking at the dollar and stocks for direction. We will have to wait for the fundamentals to improve before prices can move much higher.?
Oil Inventories
Crude oil supplies climbed 5.01 million barrels to 366.2 million in the week ended Oct. 22, the biggest increase since July, an Energy Department report showed yesterday. Gasoline inventories plunged 4.39 million barrels to 214.9 million, the largest drop since the week ended Oct. 9, 2009.
Gasoline for November delivery gained 1.19 cents, or 0.6 percent, to $2.1139 a gallon in New York. It was the highest settlement since Oct. 18.
Strikes to protest measures to raise the retirement age in France shut refineries and ports. Seven out of 11 plants in the country are operational, though some are still idled by lack of crude, Jean-Louis Schilansky, director of the UFIP, a refinery industry group, said today on France Info radio. Earlier this week, all active plants were on strike or idle.
At the Port of Marseille on the Mediterranean coast, 38 crude-oil carriers and 29 oil-product tankers are stranded because of the monthlong strike, port agents Inchcape Shipping Services said.
?Gasoline continues to be the leader,? said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. ?Gasoline cargoes may have been diverted because of the French strike and the Bayway power outage on Monday may have caused tightness in New York Harbor.?
New Jersey Refinery
ConocoPhillips lost power at its Bayway refinery in Linden, New Jersey, on Oct. 25. The company has restored power and will begin startup of the fluid catalytic cracker this weekend, Ed Choromanski, administrator for air compliance and enforcement at the New Jersey Department of Environmental Protection, said in an e-mail.
The Organization of Petroleum Exporting Countries will increase shipments by 1.5 percent in the four weeks to Nov. 13, according to Oil Movements, which monitors tanker charters. The group will export 23.41 million barrels a day during the period, the Halifax, England-based consultant said today in a report. The data exclude Ecuador and Angola.
Oil volume on the Nymex was 439,778 contracts as of 3:11 p.m. in electronic trading in New York. Volume totaled 595,290 contracts yesterday, 15 percent below the average of the past three months. Open interest was 1.39 million contracts.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.
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