Crude oil rises after Ida hits, dollar drops

Crude climbed above US$78 a barrel as companies evacuated workers in the Gulf of Mexico, an area that accounts for 27 percent of U.S. crude production and 15 percent of natural gas output. The dollar declined against 14 of its 16 major counterparts, making commodities more attractive as alternative investments.

“After wreaking havoc in Nicaragua and Costa Rica, Hurricane Ida is now threatening oil and gas production and oil refineries in the U.S. Gulf,” said Christopher Bellew, senior broker at Bache Commodities in London.

Crude oil for December delivery rose as much as US$1.52, or 2 percent, to US$78.95 a barrel in electronic trading on the New York Mercantile Exchange. It was at US$78.57 at 10:30 a.m. in London.

The contract dropped US$2.19, or 2.8 percent, to US$77.43 on Nov. 6, the lowest settlement since Oct. 30, after a report showed unemployment in the U.S., the world's biggest oil user, climbed to 10.2 percent, the highest in 26 years.

Oil also gained after the EFE news service reported Petroleos Mexicanos, Mexico's state oil company, shut 90 wells at onshore fields in the western states of Veracruz and Tabasco because of storms and flooding.

Oil reached a one-year high of US$82 on Oct. 21, as rising equities boosted investor confidence and a falling dollar encouraged buying of physical assets.

The dollar fell against the euro Monday after the Group of 20 governments agreed to keep stimulus measures and remained silent on the currency's decline this year. Investors purchase commodities including crude as an inflation hedge as the currency drops.

“People are nervous about the dollar, it is trading close to US$1.50,” versus the euro, said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “It is the main reason for the move in commodities Monday.”

The dollar fell to US$1.4995 per euro as of 10:12 a.m. in London from US$1.4847 on Nov. 6.

Ida's maximum sustained winds increased to about 105 miles (169 kilometers) per hour, from 100 mph Monday, the U.S. National Hurricane Center said in its latest advisory. Ida's center was located about 340 miles east-southeast of the mouth of the Mississippi River at 12 a.m. and moving north-northwest at 15 mph, the center said.

The Louisiana Offshore Oil Port, or LOOP, stopped taking loadings from tankers at about noon Sunday because of rough seas, said Barb Hestermann, a spokeswoman. Deliveries to refiners are being met through crude stored onshore. The system can off-take 1 million barrels a day, or about 12 percent of U.S. imports.

Chevron, the second-largest U.S. oil company, said it has shut some of its Gulf output and moved away some “non-essential personnel.”

BP has started “some precautionary curtailment of production,” according to a recorded statement on its hotline.

Exxon Mobil Corp., the world's biggest oil company, said its operations in the Gulf of Mexico are normal and it's monitoring the weather, according to an e-mail from spokesman David Eglinton. Royal Dutch Shell Plc said it's “securing” offshore facilities though drilling isn't affected.

Brent crude for December settlement rose as much as US$1.50, or 2 percent, to US$77.37 a barrel on the London-based ICE Futures Europe exchange. It was at US$76.90 at 10:30 a.m. local time.

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