Oil jumps $1 to above $78 on hurricane fears, dollar
PERTH (Reuters) – Oil rose more than $1 to above $78 a barrel on Monday, recouping some of the previous session’s near 3 percent loss, on fears a powerful hurricane would cut U.S. oil and gas supplies and also lifted by the falling dollar.
Hurricane Ida roared on Sunday through the Gulf of Mexico, where important oilfields are located, after triggering floods and mudslides that killed 124 people in El Salvador, and was expected to weaken gradually on Monday as it heads for some of the facilities in the central Gulf.
U.S. crude for December delivery rose 96 cents to $78.39 a barrel by 0559 GMT (12:59 a.m. EST) after earlier surging to $78.45. London Brent crude also rose 94 cents to $76.81.
Oil has gained around 70 percent so far this year but is still about 47 percent below the record high of above 147 hit in July last year.
“Reports of tropical storms potentially impacting operations in the Gulf of Mexico would be supportive in the near term, but investors generally focus on economic and inventory data for direction,” Australia & New Zealand Bank said in a research note on Monday.
Analysts said the falling U.S. dollar versus other commodity-linked currencies, led by the New Zealand dollar, also lent support to oil and commodities such as soy and crude palm oil, while gold jumped to another record on safe-haven buying.
NO LASTING IMPACT FROM IDA?
Fast-moving Hurricane Ida led oil companies to begin evacuating workers on Sunday and prompted the nation’s only offshore oil port to stop taking foreign crude from tankers.
Despite the threat Ida poses to U.S. oil supplies, analysts said oil prices are unlikely to stage a strong rally even if some capacity is shut in.
“A combination of ample spare refining capacity and plenty of crude in land and offshore storage reduces the chances that this storm will have a lasting impact on the oil price trajectory,” JP Morgan’s energy analyst Lawrence Eagles said in a note.
Saudi Arabia, the world’s top oil exporter, plans to keep curbs on crude oil supplies steady in December to some of its customers in Asia, industry sources said on Monday.
Underscoring the slim chance that OPEC would soon raise supplies, United Arab Emirates Oil Minister Mohammed al-Hamli said on Saturday that raising oil production was not currently on the agenda for the producer group.
Oil settled down $2.19 on Friday, after data showed the U.S. jobless rate jumped more than expected to a 26-1/2-year high of 10.2 percent in October, raising concerns about a drag on fuel demand.
The U.S. Labor Department said employers cut 190,000 jobs in October, more than the 175,000 that markets had expected, bringing unemployment to 10.2 percent.
Analysts said investors were set to scrutinize trade reports from the world’s biggest exporters — Germany, China and the United States — to gauge if the recent economic revival is sustainable once governments and central banks curb the flow of easy money.