Crude Oil Trades Near $79 on Recovery Optimism, Weaker Dollar

Nov. 17 (Bloomberg) -- Crude oil traded near $79 a barrel in New York after rising on optimism fuel demand will increase amid improved prospects for an economic recovery in the U.S., the world’s biggest energy consumer.

Oil gained 3.3 percent yesterday as stocks climbed after U.S. retail sales increased more than forecast and Asian government leaders pledged to maintain economic stimulus spending. Crude also gained as the dollar weakened, increasing the appeal of commodities as an alternative investment.

“The dollar is weaker and stocks are up, both of which are helping send prices higher,” said Ric Navy, a broker at BNP Paribas SA in New York. “The funds are still coming in, and that should push the market higher.”

Crude oil for December delivery traded at $78.85 a barrel, down 5 cents, in electronic trading on the New York Mercantile Exchange at 10:15 a.m. Sydney time. Yesterday, the contract rose $2.55 to settle at $78.90, the biggest gain since Sept. 30. Futures are up 77 percent this year.

The Standard & Poor’s 500 Index gained 1.5 percent to 1,109.3 yesterday in New York and the Dow Jones Industrial Average added 1.3 percent to 10,406.96. Both reached the highest levels since Oct. 2, 2008.

The 21-member Asia-Pacific Economic Cooperation group, which represents 54 percent of the global economy, said in Singapore that it will maintain stimulus measures until there is “durable” growth.

OPEC Meeting

The Organization of Petroleum Exporting Countries won’t increase its output quotas when it meets in December, Qatar’s energy minister, Abdullah bin Hamad al-Attiyah, told Bloomberg News in Tokyo yesterday.

OPEC will meet on Dec. 22 in Luanda, Angola, to discuss output targets after agreeing to leave them unchanged at the past three meetings. The group’s compliance with the production cuts slipped to 60 percent in October from 62 percent in September, it said in a report on Nov. 11.

October retail sales in the U.S. rose 1.4 percent, Commerce Department figures showed yesterday in Washington. Sales were projected to climb 0.9 percent, according to the median estimate of 66 economists in a Bloomberg News survey.

The gross domestic product of Japan, the third-biggest oil consumer, grew at a 4.8 percent pace in the third quarter. Japan’s growth rate was higher than the forecasts of all 20 economists in a Bloomberg News survey, Cabinet Office figures showed yesterday in Tokyo. It was the second straight advance after the nation’s deepest postwar recession.

The dollar was at $1.4969 per euro at 10:10 a.m. in Sydney from $1.4970 yesterday.

Brent crude oil for January settlement climbed $2.45, or 3.2 percent, to end the session at $78.76 a barrel on the London-based ICE Futures Europe exchange yesterday.