NEW YORK - Oil rose nearly 2 percent to
above $79 a barrel on Tuesday after data showed U.S. factory
orders in September expanded at a quicker pace than expected,
signaling potential for more fuel demand in the world's biggest
energy consumer.
Factory orders rose 0.9 percent in September, surpassing
Wall Street analyst expectations, and factory inventories fell.
"Factory orders are a positive sign. This helps the broad
sentiment that an economic recovery will eventually boost fuel
demand and send prices higher," said Gene McGillian of
Tradition Energy in Stamford, Connecticut.
Crude oil rose along with gold, which reached a record
above $1,084 an ounce. India's Central Bank bought 200 tonnes
of gold from the International Monetary Fund on Monday, in a
sale signaling more commodities demand and reassuring investors
the IMF was unlikely to sell large volumes of gold on the open
market.
"Some people are viewing the rally in gold as a reason to
push crude up," said Tim Evans, energy analyst at Citi Futures
Perspective in New York.
U.S. crude for December rose $1.47 a barrel to settle at
$79.60. London Brent crude futures rose $1.56 to settle at
$77.81 a barrel.
U.S. retail gasoline demand last week rose 3.3 percent from
a year ago , according to a MasterCard SpendingPulse report.
Demand was down 0.4 percent from the previous week, according
to the weekly report.
Oil traders were awaiting weekly U.S. oil inventory data.
Analysts expect that U.S. crude inventories rose by 1.4 million
barrels last week, but stocks of distillates like heating oil
and diesel were expected to fall by 1 million barrels,
according to the latest Reuters poll.
Inventory data is due from industry group American
Petroleum Institute late Tuesday, followed by weekly data from
the U.S. Department of Energy on Wednesday.
OPEC member Venezuela said it saw no need for the producer
group, which pumps a third of the world's oil, to raise crude
output when its ministers meet in December.
Some OPEC members have said OPEC should produce more crude
if global crude stocks fall and prices rise further.
"We do not share the position of increasing output. We
still notice a lot of instability in the oil market,"
Venezuelan Energy Minister Rafael Ramirez told reporters at a
conference.
Crude prices had fallen sharply earlier in the day as the
U.S. dollar firmed to a one-month high against other currencies
and equities markets declined. A firming dollar and falling
stock prices are typically signs of investors shunning riskier
assets, including commodities.
"It seems as if today (oil prices) have taken the lead and
detached from being the follower of equity markets and the
dollar," McGillian said.
U.S. crude futures rose to their highest level this year
at $82 per barrel in late October, when the dollar weakened to
a 14-month low.