Oil tops $83 as dollar extends loss

Monday, 11 October 2010 22:13 - - {{hitsCtrl.values.hits}}

Singapore: Oil rose for a second straight session on Monday to top $83 as the dollar extended 15-year lows versus the yen and weakened against the euro, bolstering the appeal of commodities as an alternative investment.

US crude for November climbed 67 cents to $83.33 a barrel by 0353 GMT, after rising as much as 0.9 percent earlier to $83.42. Prices touched a five-month intra-day high of $84.43 last week. ICE Brent gained 55 cents to $84.58.

Weak US jobs data for September last week strengthened the case for further monetary stimulus to boost the struggling economy, as world financial leaders over the weekend sought to defuse mounting tensions over currencies.

"The dominant theme is the dollar," said David Taylor, an analyst at CMC Markets in Sydney.

"The US economic data hasn't surprised to the upside for some time, and if the data continues to disappoint, investors will see that as a case for more stimulus."

Expectations that the US Federal Reserve will inject more money into the economy before the end of the year are adding pressure on the battered dollar, which renders oil cheaper for holders of other currencies.

Money managers' net long crude oil positions on the New York Mercantile Exchange jumped to more than 165,000 in the week to Oct. 5, the highest since April, the Commodity Futures Trading Commission said on Friday, from about 107,000 a week earlier.

Some analysts say the increase shows the near 9 percent rally in crude prices over the same period was largely driven by investment money.

"It's a bit of a risky market," Taylor said. "If there is further money printing and it has a limited impact on the economy, you are left with fewer policy levers to work with and that will make markets very nervous."

Opec is unlikely to change oil output targets when it meets in Vienna on Thursday, delegates told Reuters on Sunday, while Qatar said current oil prices posed no harm to the global economy.

The oil price has stayed within a range of $70 to $80 a barrel for most of this year -- judged by the Organization of the Petroleum Exporting Countries to be high enough for producers who need to invest and low enough not to damage the world's economy.

   -Reuters