Tulsa World: Oil: Higher on weak dollar

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Oil: Higher on weak dollar

By DIRK LAMMERS AP Energy Writer
Published: 11/23/2009 10:45 AM
Last Modified: 11/23/2009 3:29 PM

NEW YORK — Oil prices jumped Monday and nearly touched $80 before falling, on a weakening dollar and surprising housing numbers which lifted hopes of an economic rebound.

Benchmark crude for December delivery rose 9 cents to settle at $77.56 a barrel on the New York Mercantile Exchange. It traded as high as $79.92 earlier in the day.

The National Association of Realtors said U.S. home sales rose 10.1 percent in October. That is the highest level in more than two years and helped push crude prices higher on expectations of increased demand.

Still, crude in storage is above normal levels for this time of year and refiners that turn oil into gasoline, jet fuel and diesel are cutting back because demand is so weak.

Valero Energy became the latest to shut down a refinery Friday, the largest U.S. facility shut down so far this year.

That follows other refiners like Sunoco and Western Refining, who have shut down plants in recent months and off almost 1,000 workers.

Refiners say they can't raise the price of gasoline and jet fuel because people aren't traveling as much, but they must pay higher prices for crude because of the weak dollar.

Investors holding stronger currencies can buy more dollar-based crude when the U.S. currency falls. But the refiners that turn crude into gasoline, jet fuel and diesel are cutting back because demand is so weak

Air travel is projected to decline 6.7 percent, or 2.3 million travelers this year compared to 2.5 million in 2008.

The dollar began the week lower as a Federal Reserve official urged the continuation of stimulus programs and as home sales in October greatly exceeded market expectations, revving up traders' taste for higher-yielding assets.

In morning trading in New York, the 16-nation euro rose to $1.4975 from $1.4857, while the British pound jumped to $1.6613 from $1.6481.

And gold prices surged to a new record high of $1,174 an ounce as investors looked for an alternative investment to a declining buck. The commodity is considered a hedge against the greenback because of its stable store of value.

In other Nymex trading, heating oil rose less than a penny to settle at $1.9799 a gallon. Gasoline for December delivery fell less than a cent to settle at $1.9794 a gallon. Natural gas for December delivery rose about 5 cents to settle at $4.473 per 1,000 cubic feet.

In London, Brent crude for January delivery fell 26 cents to settle at $77.46 on the ICE Futures exchange.

____

Associated Press writer Barry Hatton in Lisbon, Portugal, contributed to this report.

By DIRK LAMMERS AP Energy Writer

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