Future Oil Prices Climbed as Dollar Declines in US Stockpiles

Future Crude oil prices climbed as the dollar tumbled to a 15-year low against the yen and a government report showed a smaller-than-forecast gain in U.S. stockpiles.

Oil increased as much as 2.6 percent as the greenback fell on concern the Federal Reserve?s regional business survey will show a slowing economic recovery. A weaker greenback bolsters the appeal of commodities to investors. An Energy Department report showed that supplies rose 667,000 barrels last week, less than half what was projected in a Bloomberg News survey.

?It?s all the dollar,? said Richard Ilczyszyn, a market strategist at Lind-Waldock, a broker in Chicago. The dollar will probably remain weak until after the Federal Reserve meeting and the congressional elections in November, he said.

Crude oil for November delivery rose $1.75, or 2.2 percent, to $81.24 a barrel at 11:05 a.m. on the New York Mercantile Exchange. Oil traded at $80.18 a barrel before the release of the report at 10:30 a.m. in Washington.

The November contract expires today. More-active December futures increased $1.67, or 2.1 percent, to $81.83.

Brent crude oil for December settlement gained $1.88, or 2.3 percent, to $82.98 a barrel on the London-based ICE Futures Europe exchange.

Futures in New York tumbled 4.3 percent yesterday, the biggest drop since Feb. 4, after an unexpected rate increase by China?s central bank raised speculation that fuel demand might drop in the world?s biggest energy-consuming country.

The Fed is scheduled to release its Beige Book regional business survey at 2 p.m. New York time, two weeks before the central bank?s November meeting.

The Fed?s next meeting is on Nov. 2-3 in Washington. The U.S. congressional elections will occur on Nov. 2.

Cushing Stocks

Total U.S. stockpiles were forecast to increase 1.5 million barrels in the week ended Oct. 15, according to the median of 15 analysts surveyed by Bloomberg News.

Crude oil inventories at Cushing, Oklahoma, the delivery point for New York futures, dropped 1.1 million barrels to 34 million, the biggest one-week decline since January. The decrease left stockpiles at the lowest level since the week ended April 9.

?The market seems to be focusing on the draw in Cushing,? said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. ?It?s related to the lag effect from the Enbridge pipeline outage that we had a couple of weeks ago.?

Increasing equities also bolstered the oil market. U.S. stocks rebounded from the biggest drop since August yesterday, as higher-than-estimated results at Boeing Co. and Delta Air Lines Inc. fueled optimism in corporate earnings.