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Oil higher despite stronger dollar
Source: Agencies |
November 30, 2010, Tuesday
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OIL prices rose yesterday after the European Union agreed on a bailout plan for Ireland, which offset some concern that a financial crisis could surface in Portugal and Spain.
The gain came even as the dollar was stronger against other currencies. Since oil and other commodities are priced in dollars, a stronger dollar makes them more expensive for buyers who use foreign currencies.
Benchmark crude for January delivery rose US$1.97 to settle at US$85.73 a barrel on the New York Mercantile Exchange.
The dollar soared against the euro. In late trading in New York, the euro dropped to US$1.3116 from US$1.3237 late on Friday. It had earlier fallen below US$1.31 for the first time since Sept. 21.
The EU agreed Sunday to give Ireland 鈧67.5 billion (US$89.4 billion) in loans and outlined new rules for future emergencies in an effort to restore faith in the euro.
"The EU rescue package for the Republic of Ireland ... is helping risk appetite to rise and boosting investor demand for commodities," said a report from analysts at Commerzbank in Frankfurt.
Still, with worries remaining about the financial crisis affecting other EU countries like Portugal or Spain and continuing tensions between North and South Korea, investors could soon turn more cautious.
"We do not believe the latest price gains are sustainable. Another price slump in the direction of US$80 is more likely than another rise in the direction of US$90," Commerzbank said.
In other Nymex trading in December contracts, heating oil rose 4.19 cents to settle at US$2.3581 a gallon and gasoline added 7.43 cents at US$2.2846 a gallon. Natural gas for January delivery lost 18.9 cents to US$4.210 per 1,000 cubic feet.
In London, Brent crude added US$1.54 to settle at US$87.34 a barrel on the ICE Futures exchange.
The gain came even as the dollar was stronger against other currencies. Since oil and other commodities are priced in dollars, a stronger dollar makes them more expensive for buyers who use foreign currencies.
Benchmark crude for January delivery rose US$1.97 to settle at US$85.73 a barrel on the New York Mercantile Exchange.
The dollar soared against the euro. In late trading in New York, the euro dropped to US$1.3116 from US$1.3237 late on Friday. It had earlier fallen below US$1.31 for the first time since Sept. 21.
The EU agreed Sunday to give Ireland 鈧67.5 billion (US$89.4 billion) in loans and outlined new rules for future emergencies in an effort to restore faith in the euro.
"The EU rescue package for the Republic of Ireland ... is helping risk appetite to rise and boosting investor demand for commodities," said a report from analysts at Commerzbank in Frankfurt.
Still, with worries remaining about the financial crisis affecting other EU countries like Portugal or Spain and continuing tensions between North and South Korea, investors could soon turn more cautious.
"We do not believe the latest price gains are sustainable. Another price slump in the direction of US$80 is more likely than another rise in the direction of US$90," Commerzbank said.
In other Nymex trading in December contracts, heating oil rose 4.19 cents to settle at US$2.3581 a gallon and gasoline added 7.43 cents at US$2.2846 a gallon. Natural gas for January delivery lost 18.9 cents to US$4.210 per 1,000 cubic feet.
In London, Brent crude added US$1.54 to settle at US$87.34 a barrel on the ICE Futures exchange.
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