Oil Trades Above $71 After Gain on Jobless Claims, Dollar Drop

Oct. 9 (Bloomberg) -- Crude oil traded little changed above $71 a barrel in New York, poised for a second week of gains, after the dollar declined and the number of Americans filing jobless claims dropped.

Oil climbed 3 percent yesterday after Labor Department data showed initial unemployment benefit applications fell to the lowest since January, boosting optimism of a demand recovery in the biggest energy-consuming nation. The dollar fell to its weakest level against the currencies of six major U.S. trading partners in almost 14 months, boosting the appeal of commodities as a hedge against inflation.

“Crude oil is tracking the behavior of other markets,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “The jobs number was good. The recession is probably over and employment is a lagging indicator.”

Crude oil for November delivery was at $71.43 a barrel, down 26 cents, in electronic trading on the New York Mercantile Exchange at 9:09 a.m. Sydney time. Yesterday, the contract rose $2.12 to settle at $71.69. Prices are poised for a 2 percent increase for the week.

The U.S. currency dropped against the euro as European Central Bank President Jean-Claude Trichet said the region’s economy is emerging from a period of “free fall.”

The Dollar Index, which IntercontinentalExchange Inc. uses to track the U.S. currency against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, dropped 0.7 percent to 75.966 yesterday, after reaching 75.767, the weakest since Aug. 11, 2008.

Gold Rises

Gold futures for December delivery gained $11.90, or 1.1 percent, to settle at a record $1,056.30 an ounce on the Comex division of Nymex yesterday. The UBS Bloomberg Constant Maturity Commodity Index, which tracks 26 raw materials, gained 2.5 percent to 1190.681, the highest since Oct. 3, 2008.

The dollar traded at $1.4790 per euro at 9:11 a.m. Sydney time, from $1.4794 yesterday. A weaker dollar increases the appeal of commodities as an alternative investment.

Brent crude oil for November settlement rose $2.57, or 3.8 percent, to end the session at $69.77 a barrel on the London- based ICE Futures Europe exchange yesterday.