Oil up on weaker dollar

NEW YORK: Oil prices inched higher Monday on lingering doubts over the global economic recovery and a weaker dollar.

By midday, oil prices rose 35 cents to $76.40 a barrel on the New York Mercantile Exchange.

Analysts warned that despite talk about the end of the recession and recovering markets, the level of global demand for oil was still uncertain.

Prices tumbled $1.61 on Friday and were down as much $5.57, or 7 per cent, after Dubai's investment arm, Dubai World, asked for a six-month reprieve on payments for about $60 billion in debt. The drop was the biggest decline in oil prices since April 20.
Energy prices regained some of that ground and by Sunday, the United Arab Emirates took steps to avert any run on banks by panicked depositors.

By Monday, it appeared oil was trading once again on the same factors that have heavily influenced prices for several months the value of the dollar and global stock markets.

Oil prices usually climb when the dollar falls, as dollar-denominated commodities such as oil and gold become cheaper to investors holding other currencies.

The safe-haven dollar mostly slipped Monday morning in New York, with the euro rising back over $1.50. It managed, however, to hold above 14-year yen lows as investors held their breaths on the Dubai debt crisis.

In December, for the first time in about 10 years, oil prices are expected to be twice what they were a year ago, says Tom Kloza, chief oil analyst for OPIS.

Crude prices have been trading between $75 and $82 a barrel for the past month or so. Prices hit $33.87 a barrel on Dec. 19, 2008.

In other Nymex trading, heating oil for December delivery added a penny to reach $1.9734 a gallon. Gasoline added 2.68 cents to $1.953 a gallon. Natural gas shed 31 cents to $4.881 per 1,000 cubic feet.

In London, Brent crude for January delivery rose 29 cents to $77.47 on the ICE Futures exchange.