Oil rises above US$76 amid dollar's decline

By early afternoon in Europe, benchmark crude for January delivery was up 39 cents to US$76.41 in electronic trading on the New York Mercantile Exchange. The contract fell US$1.54 to settle at US$76.02 on Tuesday.

Crude has fallen about 7 percent since reaching its high this year of US$82 a barrel last month amid evidence that economic recovery in the U.S. will be tepid.

Earlier Wednesday in Asia, the price fell as low as US$75.78 on the eve of Thanksgiving holiday in the United States.

In other Nymex trading, heating oil was up 0.97 cent to US$1.96 a gallon. Gasoline for December delivery was 0.5 cent higher at US$1.94 a gallon.

In London, Brent crude for January delivery rose 56 cents to US$77.02 on the ICE Futures exchange.

“Today could be a volatile trading day due to the long weekend, the end of the month and the end of the financial year for some traders,” Petromatrix Research said in a report, adding that “the momentum is gently starting to become negative.”

Crude is testing the bottom of a month-long trading range of between US$76 a barrel and US$82, and some energy analysts, such as Ritterbusch and Associates in Galena, Illinois, say prices could fall to US$70 a barrel during the next month.

Other analysts, however, expect prices to rebound as investors seek an inflation hedge amid a weakening U.S. dollar. Bank of America Merrill Lynch forecast an average price of US$85 a barrel next year.

The Energy Information Administration was to announce its inventory report later Wednesday. Analysts expected it to show a jump in crude stocks. U.S. crude demand appears to be stagnant as oil supplies keep growing.

U.S. data on jobs, consumer spending and new home sales which could provide a clearer picture of the economic recovery also were due later Wednesday.

The U.S. Commerce Department on Tuesday revised down third-quarter gross domestic product growth to 2.8 percent from 3.5 percent, a disappointing result since economies emerging from recessions often see larger expansions.

The euro bought US$1.5041 in morning European trading, up from US$1.4975 late in New York on Tuesday. The British pound rose to US$1.6692 from US$1.6593 late in New York, while the dollar dropped to purchase 87.72 Japanese yen from 88.56 the night before.

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