Oil prices rise slightly on weak dollar

28th October 2010, Comments 0 comments

Oil prices rose on Thursday as traders eyed the weak dollar and digested a mixed weekly snapshot of US energy inventories before new US jobless claims data, analysts said.

New York's main contract, light sweet crude for delivery in December, rose 16 cents to 82.10 dollars a barrel.

Brent North Sea crude for December added 19 cents to 83.42 dollars.

Oil fell on Wednesday as the dollar had strengthened and after news of a sharp jump in US crude stockpiles that showed weak energy demand.

At the same time, however, tumbling gasoline (petrol) reserves suggested keen demand in the world's biggest oil consuming nation.

"Regardless of the market's schizophrenic reaction to some mixed weekly inventory statistics, the main driving force behind oil prices these days is still the dollar," said analyst Tamas Varga at brokerage PVM Oil Associates.

The dollar is trending lower on expectations the US Federal Reserve could next week renew large-scale asset purchases to boost the economy, in a second round of quantitative easing that dealers have dubbed QE2.

A weak US unit makes dollar-priced oil cheaper for buyers using stronger currencies and therefore tends to lift prices.

Later on Thursday, traders will focus on the publication of US weekly jobless claims ahead of third-quarter US economic growth data on Friday.

"Today, it is a fairly busy day in the macroeconomic figures," said Sucden analyst Myrto Sokou.

"The main focus will switch to the weekly US jobless claims that could provide a useful indicator for the potential size and form of the widely expected QE2 at the (Fed) meeting next week."

She added: "In the meantime, it is likely that the US dollar movements will continue to dominate the oil market."

US crude oil inventories rose five million barrels in the week ended October 22, far more than market expectations for a modest gain of 700,000 barrels.

But gasoline stockpiles tumbled 4.4 million barrels against expectations for a 200,000-barrel decline.

© 2010 AFP

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