Oil gains as weak US data raises stimulus hopes

Saturday, 23 October 2010 04:16 - - {{hitsCtrl.values.hits}}

Singapore-(Reuters) - Oil rose on Friday as the dollar weakened, after jobs and business activity data signaled the U.S. economy would require additional stimulus.

A G20 finance ministers meeting in South Korea looked unlikely to reach a conclusion on currencies as dollar volatility rattles commodities markets.

U.S. crude for December rose 63 cents to $81.19 by 2:30 a.m. ET, aided by rising stock markets in Asia, reversing part of Thursday’s drop of more than 2 percent. ICE Brent gained 63 cents to $82.46.

Oil was still headed for a second straight week of losses, though marginal, responding to a rising dollar on track for its first week of gains in six weeks. A stronger dollar raises the cost of oil imports for buyers excluding top consumer the United States.

Despite intra-day volatility, oil prices have so far this month remained in a relatively tight range slightly wider than $5, between Tuesday’s low of $79.25 after China raised interest rates and a five-month peak of $84.43 on October 7.

“For the last three or four months, we saw a big decline in the U.S. dollar, and now lots of people see that it will be time for a rebound or to see a correction,” said Ken Hasegawa, a commodity derivatives manager at Japan’s Newedge brokerage.

“But if the Fed in November shows big stimulus plans, that will send the dollar even lower. Participants have no confidence about price direction. It’s still a rangebound market.”