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Oil above $71 as global stocks gain, dollar drops

(Agencies)
Updated: 2009-10-06 19:50

VIENNA: Oil prices rose above $71 a barrel Tuesday, helped by a jump in global stock markets and a weaker dollar, which increases the appeal of commodities to investors.

Benchmark crude for November delivery was up 79 cents at $71.20 by noon European electronic trading on the New York Mercantile Exchange. The contract gained 46 cents to settle at $70.41 Monday.

Arab states have launched moves with China, Russia, Japan and France to stop using the dollar for oil trading, a report said but this was denied by Kuwait. [Agencies]

Oil has meandered near the $70 a barrel level for months as traders struggle to gauge how strongly the US economy will recover.

Last week, poor jobs and manufacturing data undermined optimism, but on Monday the Institute for Supply Management said its service index showed that sector grew in September for the first time since August of last year.

Vienna's JBC Energy attributed the upward trend to the "somewhat encouraging US service sector data and a weaker greenback" -- a reference to the falling dollar, dragged down by reports that major oil importers were rethinking the US currency's role in pricing oil.

The euro rose to $1.4726 on Tuesday from $1.4647 the previous day, and the dollar slipped to 89.04 yen from 89.53.

Related readings:  Oil keep falling on oversupply  Govt to raise oil reserve enough to last 90 days  China starts building major oil reserve  Oil prices dip below $69; supplies up  CNOOC bids for big stake in Nigerian oil

Crude traders often look to stock markets for a sense of overall investor confidence. The Dow Jones industrial average rose 1.2 percent Monday, and most Asian and European indexes gained in early trading Tuesday.

In other Nymex trading, heating oil rose 2 cents to 1.81 and gasoline gained 1.6 cents to $1.77 a gallon. Natural gas for November delivery rose 1.8 cents to $5.01 per 1,000 cubic feet.

In London, Brent crude rose 87 cents to $68.91 on the ICE Futures exchange.