Crude Oil Trades Near $79 as Dollar Weakens, Ida Curbs Output

Nov. 10 (Bloomberg) -- Crude oil traded near $79 a barrel in New York after rising yesterday as the dollar weakened and Tropical Storm Ida entered the Gulf of Mexico, forcing BP Plc and Chevron Corp. to cut output.

Oil rose as much as 3.6 percent yesterday as the dollar fell against the euro, increasing the appeal of commodities as an alternative investment. Workers were evacuated in the Gulf of Mexico, an area that accounts for 27 percent of U.S. crude production and 15 percent of natural gas output.

“After wreaking havoc in Nicaragua and Costa Rica, 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. “That and a weak dollar is behind the higher prices.”

Crude oil for December delivery traded at $79.38 a barrel, down 5 cents, in electronic trading on the New York Mercantile Exchange at 10:17 a.m. Sydney time. Yesterday, the contract rose $2.00, or 2.6 percent, to $79.43. Prices have gained 78 percent since the start of the year.

Rising equities also helped push energy prices higher. The Standard & Poor’s 500 Index added 2.2 percent to 1,093.08 in New York yesterday, and the Dow Jones Industrial Average increased 2 percent. The dollar traded at $1.5002 against the euro at 10:19 a.m. in Sydney, from $1.4999.

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

Storm Track

Ida’s maximum sustained winds are near 70 miles (110 kilometers) per hour, the U.S. National Hurricane Center said in an advisory yesterday. Ida’s center was located about 60 miles southeast of the mouth of the Mississippi River and was moving north at 18 mph, the center said.

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.

U.S. crude-oil inventories probably rose 1 million barrels in the week ended Nov. 6, according to the median of 10 estimates by analysts before an Energy Department report.

The department is scheduled to release its weekly report on Nov. 12 at 11 a.m. in Washington, a day later than usual because of the Veterans’ Day holiday on Nov. 11.

Brent crude for December settlement rose $1.90, or 2.5 percent, to $77.77 a barrel on the London-based ICE Futures Europe exchange yesterday.