OPEC Says It May Raise Oil Output at December Meeting

Oct. 22 (Bloomberg) -- The Organization of Petroleum Exporting Countries, supplier of 40 percent of the world’s oil, may decide to increase production at its meeting in December, the group’s Secretary-General Abdalla El-Badri said.

An increase will depend on whether prices remain at $75 to $80 a barrel, stockpiles return to the five-year average and floating inventories disappear, El-Badri said today in London.

OPEC will meet Dec. 22 in Luanda, Angola, to review its production quota system. Crude futures have rallied 80 percent this year, trading at around $80 a barrel today in New York as the group implements its biggest supply reduction.

“We are in a very comfortable zone at this time,” El- Badri told reporters. “If this price will continue, if we see stocks go back to the normal level, if we see there is a real economic growth, then I’m sure our member countries will increase the production.”

This year’s gain in prices has enabled OPEC to resume seven postponed projects that will provide 1.2 million barrels a day of additional capacity, El-Badri said. These are among 35 projects that OPEC had delayed until after 2013. If current prices persist, all 35 projects may be restored, he said.

Kuwaiti Oil Minister Sheikh Ahmad al-Sabah said on Oct. 6 that OPEC is unlikely to change output targets at the December gathering and that it is “impossible” for the organization to raise production this year. Saudi Arabia, the group’s biggest member and de facto leader, has yet to express an opinion.

Bound by Quotas

The 11 OPEC members bound by production quotas agreed last December to a collective limit of 24.845 million barrels day from the start of this year. The limit came after oil prices sank 70 percent from their July 2008 peak. The compliance rate with that target has slipped to about 64 percent, El-Badri said.

Angola, Nigeria and Venezuela are talking to other members about having their allocations increased, El-Badri said.

OPEC has invited Russia, the largest oil producer outside the group, to the December conference and may also invite Bahrain and former member Indonesia, El-Badri said.

OPEC’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Iraq is exempt from the quota system.

Crude Oil Poised for Fourth Week of Gains on Economic Recovery

Oct. 23 (Bloomberg) -- Crude oil traded above $81 a barrel in New York, poised for a fourth week of gains, on improved prospects for an economic recovery in the U.S., the world’s biggest energy consumer.

Oil has advanced 3.6 percent this week as U.S. equities gained on better-than-estimated company earnings, boosting speculation that the worst recession since the 1930s is over. Prices also increased as the dollar declined against the euro, adding to the appeal of commodities as an alternative investment.

“It has been led by the equity markets,” said Mark Pervan, a senior commodity strategist at ANZ Banking Group Ltd. in Melbourne. Better-than-expected earnings “continue to flag recovering U.S. demand and it puts further downward pressure on the dollar as a lower requirement for risk aversion.”

Crude oil for December delivery traded at $81.34 a barrel, up 15 cents, in electronic trading on the New York Mercantile Exchange at 8:21 a.m. Singapore time. Yesterday, the contract fell 18 cents to settle at $81.19. Prices have climbed 82 percent this year.

U.S. stocks advanced for the first time in three days yesterday. The Standard & Poor’s 500 Index gained 1.1 percent, recouping more than half of its retreat over the previous two days. The Dow Jones industrial Average rose 1.3 percent.

Australia’s benchmark S&P/ASX 200 Index rose 0.8 percent at 11:02 a.m. Sydney time.

“As we enter the tail-end of the U.S. reporting season, you can look back and say that the report card was better than expected,” Pervan said.

Weaker Dollar

The dollar traded at $1.5041 per euro at 11:02 a.m. in Sydney, after falling 0.1 percent yesterday. It slid beyond $1.50 on Oct. 21 for the first time since August 2008, touching $1.5046.

Oil dropped 0.2 percent yesterday on speculation the Organization of Petroleum Exporting Countries members will agree to increase production at a December meeting. OPEC may raise output to keep oil in a range of $75 to $80 a barrel, Secretary- General, Abdalla El-Badri said in London. The 12-member group last agreed to increase targets in September 2007.

An increase in OPEC’s production will depend on prices remaining at $75 to $80 a barrel, as well as on stockpiles returning to the five-year average and the elimination of floating storage, El-Badri told reporters in London.

The 12-member group will meet on Dec. 22 in Luanda, Angola, to review output targets.

OPEC accounts for about 40 percent of the world’s oil production. OPEC members agreed in September 2008 that the 11 countries with quotas would trim output by 4.2 million barrels a day to 24.845 million. Iraq is exempt from the quota system.

Brent crude oil for December settlement traded at $79.76 a barrel, up 25 cents, on the London-based ICE Futures Europe exchange at 8:21 a.m. Singapore time. Yesterday, the contract declined 18 cents to settle at $79.51.

Gold Declines as Dollar Rebounds, Rally to Record Spurs Sales

Oct. 22 (Bloomberg) -- Gold fell for the first time in a week as a rebounding dollar eroded the appeal of the precious metal as an alternative investment.

The U.S. Dollar Index, which measures the greenback against six currencies, rose as much as 0.7 percent from a 14-month low yesterday. Gold reached a record $1,072 an ounce on Oct. 14.

“A stronger U.S. dollar shall unleash strong gold sellers,” said Dennis Gartman, an economist in Suffolk, Virginia, and the editor of the Gartman Letter.

Gold futures for December delivery fell $5.90, or 0.6 percent, to $1,058.60 an ounce on the New York Mercantile Exchange’s Comex division, the first loss since Oct. 15.

Gold typically moves in the opposite direction of the dollar. The most-active futures have climbed 20 percent this year while the dollar index is down 7.6 percent.

Yesterday, the euro topped $1.50 for the first time since August 2008. The European currency will trade at $1.50 at year- end, according to the median forecast of 48 analysts in a Bloomberg survey. The dollar tumbled to $1.6038 per euro on July 15, 2008, the weakest since the 16-nation currency’s 1999 debut.

Gold may be too expensive for some investors, analysts said. Bullion held in the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, fell 1.22 metric tons to 1,108.09 tons as of yesterday, the first decline since Oct. 7, according to the company’s Web site. The fund’s holdings reached an all-time high of 1,134 tons on June 1.

India Imports Decline

Gold imports in India, the world’s biggest consumer, will be about 50 tons in the fourth quarter, compared with a quarterly average of 100 to 120 tons, Anjani Sinha, the Indian Bullion Market Association president, said today in an interview. High prices have hurt demand, he said.

Sales in India typically reach their highest level during the Hindu festival of Diwali, which occurred on Oct. 17, and in the wedding season that follows. A rebound in demand will be “very difficult” unless the price declines to $950 or less, Sinha said.

Silver futures for December delivery dropped 28 cents, or 1.6 percent, to $17.545 an ounce in New York. Platinum for January delivery fell $4.50, or 0.3 percent, to $1,369.90 an ounce, while palladium for December delivery sank $1.75, or 0.5 percent, to $339.75 an ounce.

Dollar Falls to 14-Month Low Versus Euro as Risk Appetite Rises

Oct. 23 (Bloomberg) -- The dollar tumbled to a 14-month low against the euro as a recovery in corporate earnings and improved prospects for the global economy revived demand for riskier assets.

The greenback is set for a third-weekly drop against the 16-nation currency before reports today forecast to show German business confidence increased and sales of existing U.S. homes rose. The Australian and New Zealand dollars gained as regional equities extended an earnings-sparked rally in U.S. shares and on bets the nations’ will increase interest rates faster than other developed countries.

“Risk appetite is strong, buoyed by a series of better- than-expected profit reports and a brighter outlook for the global economy,” said Masahide Tanaka, senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s second- largest bank. “Money will continue to shift away from the dollar, now the most-favored funding currency, and flood into higher-yielding assets.”

The dollar traded at $1.5045 per euro at 9:19 a.m. in Tokyo from $1.5033 yesterday in New York. It earlier reached $1.5047, the weakest since August 2008. The greenback rose to 91.50 yen from 91.30 yen. The euro was at 137.73 yen from 137.24 yen.

The pound rose to $1.6673 from $1.6624, after earlier hitting $1.6674, the highest since Sept. 14.

Australia’s dollar was at 92.93 U.S. cents from 92.69 cents yesterday. It climbed to 93.29 cents on Oct. 21, the highest level since August 2008. New Zealand’s dollar was at 75.93 cents, from 75.78 cents yesterday. It advanced to 76.35 cents on Oct. 21, the strongest since July 2008.

Home Sales

The greenback weakened beyond $1.50 versus the euro for the first time in February 2008 and stayed there until August 2008 after reaching $1.6038 that July. The dollar strengthened as investors sought the safety of U.S. government debt after the Sept. 15, 2008, bankruptcy of Lehman Brothers Holdings Inc. froze credit markets, with the U.S. currency reaching a 2 1/2- year high of $1.2330 on Oct. 28, 2008.

The euro headed for a third weekly gain against the yen on optimism that the 16-nation economy is on the mend.

The Munich-based Ifo institute’s business climate index, based on a survey of 7,000 executives, climbed to 92 in October from 91.3 in the previous month, according to a Bloomberg News survey before the data release today.

European Central Bank council member Erkki Liikanen said this week on Finland’s YLE Radio Suomi that the euro area’s economy is no longer weakening.

Sales of existing homes in the U.S. rose in September to an annual rate of 5.35 million, a two-year high, from 5.1 million in the previous month, according to the median forecast of 76 economists in a Bloomberg survey. The report from the National Association of Realtors is due at 10 a.m. in Washington.

Stocks Advance

The dollar is poised for a third weekly decline against the currencies of Australia and New Zealand after the Standard & Poor’s 500 Index increased 1.1 percent yesterday as better-than- estimated earnings boosted speculation that the worst recession since the 1930s is over. The MSCI Asia Pacific Index of regional shares rose 0.5 percent today.

Profits have topped estimates at 79 percent of the companies in the S&P 500 that have released results, according to Bloomberg data. That would mark the highest proportion in data going back to 1993.

Earnings fell for a ninth-straight quarter in the July- September period, according to estimates compiled by Bloomberg, and are projected to return to growth in the final three months of the year.

New Zealand’s dollar traded near the highest since July 2008 after central bank Governor Alan Bollard said this week that a strong currency won’t impede raising borrowing costs. Policy makers meet next week and are expected by all 11 economists surveyed by Bloomberg News to leave the nation’s official cash rate unchanged.

Benchmark interest rates are 3.25 percent in Australia and 2.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits.

FKLI Commentary on 23/10/09

FKLI Oct Futures contract fall 5 points lower to close at 1255 levels as compare to previous trading session to with a total of 5,032 lots traded in the market. FKLI was traded lower near end of trading sessions as Europe indices were traded lower on opening despite regional indices were mainly recover from heavy sell down in earlier sessions.

Technically, FKLI price manages to rebound 61.8% Fibonacci resistance level at 1264.5 regions before continue to plunge lower and close at 61.8% at 1254.5 regions. Based on our technical view, our opinion suggests FKLI would only trade higher in the coming trading sessions provided support levels at 1250 and 1242 were not violated during trading sessions. Traders were advice to long position in the coming trading while be cautious around resistance levels at 1264 and 1270 regions.

FCPO Commentary on 23/10/09

CPO 3rd month Jan futures contract traded RM42 higher as compare to previous trading sessions to close at RM2210 with a total of 11,485 lots traded in the market. CPO price was mainly holding within price range as major profit taking on crude oil and soybean oil electronic trading despite manage to close strong during overnight trading.

Technically, CPO price seems formed a rising wedge in the hourly chart while attempt to break 80 – day and 100 – day moving average resistance line in the daily chart. Based on our technical view, our opinion suggests CPO price would continue to trade lower provided support levels at RM2154 and RM2110 must not be violated during trading sessions. Traders were advice to hold long position provided support levels were not violated while resistance levels were seen at RM2220 and RM2251 regions.

Crude Oil Falls From Near One-Year High on Recovery Concerns

Oct. 22 (Bloomberg) -- Crude oil dropped from a one-year high in New York on concern that the pace of economic recovery in the U.S., the world’s biggest energy-consuming nation, may falter.

Oil pared yesterday’s 2.8 percent gain, when it touched a high $82 a barrel, as U.S. equities dropped in the final hour of trading. Rochdale Securities analyst Dick Bove downgraded Wells Fargo & Co., prompting stocks to erase a rally spurred by better-than-estimated results at Morgan Stanley and Yahoo! Inc.

“We have seen oil fall back in price due to the complete reversal of the equities markets,” said Mike Sander, an investment adviser at Sander Capital in Seattle.

Crude oil for December delivery fell 54 cents, or 0.7 percent, to $80.83 a barrel in electronic trading on the New York Mercantile Exchange at 9:45 a.m. Sydney time. Yesterday, the contract rose $2.25 to $81.37, the highest settlement since Oct. 9, 2008. Prices are up 81 percent this year.

Wells Fargo, the largest U.S. home lender this year, slid 5.1 percent after Bove cut the shares to “sell” and said earnings were boosted by mortgage-servicing fees rather than improving business trends. The Standard & Poor’s 500 Index lost 0.9 percent and the Dow Jones Industrial Average fell 92.12 points or 0.9 percent.

The dollar traded at $1.5015 per euro at 9:34 a.m. in Sydney, after declining 0.5 percent yesterday, when it touched $1.5046, the weakest level since August 2008. A weaker dollar encourages investors to buy commodities as a hedge against inflation.

Crude Supplies

Inventories of crude oil rose 1.31 million barrels to 339.1 million, the highest level since August, an Energy Department report showed. Supplies were forecast to climb by 1.5 million barrels by analysts in a Bloomberg News survey. The gain left stockpiles 9.4 percent above the five-year average for the period, the department said.

Supplies of distillate fuel, a category that includes heating oil and diesel, fell 784,000 barrels to 169.9 million, according to the department.

Gasoline stockpiles dropped 1.1 percent to 206.9 million barrels last week, the report showed. Inventories were forecast to decrease by 850,000 barrels, according to the median of 16 analyst estimates in a Bloomberg News survey.

Brent crude oil for December settlement climbed $2.45, or 3.2 percent, to end the session at $79.69 a barrel on the London-based ICE Futures Europe exchange yesterday.

Dollar Trades Beyond $1.50 Versus Euro as Risk Demand Improves

Oct. 22 (Bloomberg) -- The dollar traded near a 14-month low versus euro as evidence of a global economic recovery damped demand for the U.S. currency as a safe haven.

The euro rise against 12 of its 16 major counterparts before reports forecast to show an index of U.S. leading indicators gained and German business confidence improved. The yen traded near a two-month low versus the euro after a report showed Japan’s exports fell at a slower pace in September, encouraging investors to seek higher-yielding assets overseas.

“People still feel safe in selling the dollar as the economy recovers,” said Toshiya Yamauchi, manager of the foreign-exchange margin-trading department at Ueda Harlow Ltd. in Tokyo. “Higher-yielding currencies, including the euro will benefit from this risk trade.”

The dollar traded at $1.5020 per euro at 9:33 a.m. in Tokyo from $1.5016 in New York yesterday when it touched $1.5046, the weakest level since August 2008. The U.S. currency fetched $1.6620 per pound from $1.6608 yesterday when it slipped to as low as $1.6637, the weakest level since Sept. 15.

The greenback was at 91.04 yen from 90.97 yen. The euro traded at 136.76 yen from 136.61 yen.

The Conference Board’s index of leading economic indicators increased 0.8 percent in September, according to the median forecast of 60 analysts in a Bloomberg survey. A sixth consecutive gain in the index would mark the best performance since 2004. The report from the New York-based group is scheduled for release at 10 a.m. in New York.

Ifo Index

Adding to signs that the economic recovery is gaining traction, the Ifo institute’s business climate index, based on a survey of 7,000 executives, climbed to 92 in October from 91.3 the previous month, according to a separate survey. The Munich- based institute will release the report tomorrow.

European industrial output rose for fourth month in August, climbing 0.9 percent from July, the European Union’s statistics office in Luxembourg said last week. European Central Bank council member Erkki Liikanen said on Finland’s YLE Radio Suomi this week the 16-nation euro area economy is no longer weakening.

“The euro-zone’s economy appears to be recovering more quickly than we’re seeing in the U.S. and Japan,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker. “The euro will likely gain further.”

ECB Policy

Traders maintained bets the ECB will keep its benchmark interest rate at 1 percent until the end of the first quarter next year. The implied yield on the three-month Euribor futures contract for March 2010 delivery was 1.07 percent yesterday, little changed from Oct. 20.

Reports from China today are forecast to show the world’s third-largest economy grew at a faster pace in the third quarter and industrial production rose in September.

The euro traded near a two-month high against the yen after government data showed Japan’s shipments abroad dropped 30.7 percent from a year earlier, compared with a 36 percent decline in August.

Japanese exporters are benefiting from a global trade rebound that’s being driven by interest-rate cuts and more than $2 trillion in government spending.

FKLI Commentary on 22/10/09

FKLI Oct Futures contract fall 11 points lower to close at 1260 levels as compare to previous trading session to with a total of 4,993 lots traded in the market. FKLI was traded lower during trading sessions as Dow Jones electronic trading were traded lower during trading sessions. Regional indices were traded firm without much sign of selling pressure.

Technically, FKLI price manage to rebound 61.8% Fibonacci resistance levels at 1270.5 regions before trading lower and breach previous support levels at 1262 regions. Based on our technical view, our opinion suggests FKLI would have some buying support at 1258 and 1254 regions; both were 50% and 61.8% Fibonacci support levels. Traders were advice to only hold long position provided support levels were not violated during trading sessions while resistance levels were seen at 1269 and 1274 regions.

FCPO Commentary on 22/10/09

CPO 3rd month Jan futures contract traded RM12 lower as compare to previous trading sessions to close at RM2168 with a total of 9,415 lots traded in the market. CPO price was mainly traded sideways after opened higher during 1st trading sessions despite soybean oil electronic trading was traded higher.

Technically, CPO hourly price seems consolidation pattern was form in the effort to test support levels at RM2154; 78.6% Fibonacci support levels. Based on our technical view, our opinion suggests CPO price would trade higher in the coming trading sessions provided support levels at RM2154 and RM2138 were not violated during trading sessions. Traders were advice to hold long position in the coming trading sessions but to ensure not violation on support levels. Resistance levels were seen at RM2175 and RM2200 regions.

Palm Oil Declines as Crude Oil Extends Drop From One-Year High

Oct. 21 (Bloomberg) -- Palm oil declined for a second day from its highest level in almost six weeks as crude oil extended its retreat from a one-year high, reducing palm’s appeal as an alternative fuel.

Palm oil for January delivery slipped as much as 1 percent to 2,159 ringgit ($637) a ton and traded at 2,168 ringgit by the 12:30 p.m. break on the Malaysia Derivatives Exchange. Crude oil for December delivery dropped as much as 0.8 percent to $78.46 a barrel in New York and traded at $78.68.

“We are optimistic on crude oil,” Nirgunan Tiruchelvam, a plantation analyst at Royal Bank of Scotland Asia Securities (Singapore) Pte., said by telephone today. “In such a context, palm oil does look undervalued.” The edible oil has gained 28 percent this year, less than half the 76 percent jump in crude, which reached a high of $80.05 a barrel yesterday.

“We reiterate our optimism on crude palm oil prices,” Tiruchelvam said. He forecasts an average of $717 a ton this year, implying about $800 for the rest of the year, he said. Crude oil has advanced for three weeks, gaining 19 percent to Oct. 16, and “a similar run-up of crude palm oil prices is in the offing,” he said.

Palm oil may climb to between 2,500 and 2,600 ringgit in the next three to four weeks as the drop in crude may be temporary, Harish Galipelli, head of research at Kochi-based JRG Wealth Management, which advises traders, said yesterday.

OPEC Wants Floating Storage to Disappear Before Raising Output

Oct. 20 (Bloomberg) -- OPEC wants to see oil stored at sea disappear before it considers raising production to stem the rally in prices, Secretary-General Abdalla El-Badri said.

The Organization of Petroleum Exporting Countries sees “no shortage of oil in the market” El-Badri told reporters at the Oil & Money conference in London today. The rally to a one-year high above $80 a barrel today is driven by higher equities, the sliding dollar and speculation, he said.

OPEC, responsible for about 40 percent of the world’s crude supply, isn’t comfortable with oil prices above $80 because they will restrain global economy recovery, El Badri said. Still, the group won’t raise production at its meeting in Angola in December unless the 125 million barrels of crude and fuel that remains in floating storage are gone, he said. In addition, conventional stockpiles need to drop.

“Anything above $80 will really hamper economic growth,” El-Badri said in a Bloomberg Television interview. “Watch the floating storage, if that is eliminated, and watch the stocks, if they are at 52, 54 days, then OPEC will take action.”

Crude oil for November delivery rose as much as 44 cents, or 0.6 percent, to $80.05 a barrel in electronic trading on the New York Mercantile Exchange today, the first time the front- month contract has traded above $80 since October. Prices have rallied 78 percent this year.

“The oil price going further up from here is perhaps the biggest risk to the global economic recovery,” said Kaha Kiknavelidze, a managing partner at London-based Rioni Capital Partners LLP, a hedge fund that specializes in emerging markets.

Traders Store

Traders including Total SA and Arcadia Petroleum Ltd. have hired oil tankers to store crude and fuel at sea because futures markets price oil in the months ahead above supply for immediate delivery, a situation known as contango.

In addition, land based inventories have risen to higher- than-usual levels as the recession cut demand. At the end of August, industrial stockpiles held by members of the Organization of Economic Cooperation and Development were the equivalent of 60.7 days of consumption, compared to 61.4 days in July, the International Energy Agency said in its last report.

Stockpiles show the rally in prices isn’t based on supply and demand, El-Badri said. The group supports moves in the U.S. to place limits in the positions so-called speculators can take in oil markets, he said. “We hope this will be under control very soon.”

OPEC has 6 million to 7 million barrels of spare oil production capacity “that can be put into the market straight away,” El Badri said in a speech at today’s conference.

Crude demand is recovering slightly as the economy picks up, and oil prices are likely to remain in their current range “with a slight upward drift,” BP Plc Chief Economist Christof Ruehl said in an interview on Bloomberg Television today.

Better Compliance

El-Badri said OPEC members should stick more closely to quotas. Compliance slipped to 62 percent in September, according to data given in OPEC’s last monthly report.

The group’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. The group is scheduled to meet again on Dec. 22 in Luanda.

Seven of the 35 oil projects delayed in member countries after oil slumped last year have now been revived because of the rally in prices, he said, adding the group is working on 150 projects to boost spare capacity

The world needs more investment in oil production to meet future demand for energy, International Energy Agency Executive Director Nobuo Tanaka said at the conference. “We need oil,” he said.

Crude Oil Drops Below $79 as Dollar Climbs, Stockpiles Increase

Oct. 21 (Bloomberg) -- Crude oil in New York dropped below $79 a barrel as the dollar climbed and an industry report showed an increase in crude stockpiles in the U.S., the world’s biggest energy consumer.

Oil fell for a second day after U.S. equities declined and the dollar rose from a 14-month low against the euro, limiting investor need for commodities to hedge against inflation. The American Petroleum Institute reported that crude supplies rose 3.85 million barrels.

“The U.S. dollar strengthening has helped pull the oil price off its highs,” said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. “The API data showed quite a decent build in crude inventories. That’s probably also a dampening influence on the oil price.”

Crude oil for December delivery dropped as much as 58 cents, or 0.7 percent, to $78.54 a barrel in electronic trading on the New York Mercantile Exchange. It was at $78.58 a barrel at 9:31 a.m. Singapore time. Yesterday, the contract dropped 84 cents, or 1.1 percent, to end the session at $79.12. The November contract expired yesterday at $79.09, down 52 cents.

U.S. stocks fell yesterday as a disappointing report on housing starts overshadowed better-than-estimated earnings at companies from Apple Inc. to Caterpillar Inc. The Standard & Poor’s 500 Index slipped 0.6 percent in New York and the Dow Jones Industrial Average decreased 0.7 percent. Australia’s benchmark S&P/ASX 200 Index declined 0.4 percent at 10:36 a.m. in Sydney.

The dollar gained for a second day against the euro, trading at $1.4921 per euro at 9:53 a.m. in Tokyo from $1.4945 yesterday in New York.

Crude Stockpiles

An Energy Department report due today will show that U.S. inventories of oil rose 1.5 million barrels last week, according to the median of 15 estimates by analysts in a Bloomberg News survey. The department is scheduled to release its weekly report at 10:30 a.m. in Washington.

Crude oil inventories rose to 343 million barrels last week, the API report showed, the highest in seven weeks. Gasoline supplies declined 558,000 barrels to 209.8 million. Distillate fuel stockpiles, a category that includes heating oil and diesel, dropped 998,000 barrels to 167 million, the report showed.

The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires reports be filed with the energy Department for its weekly survey.

Housing starts rose 0.5 percent in September to an annual rate of 590,000 and the pace in August was lower than previously estimated, according to the Commerce Department. Economists in a Bloomberg News survey forecast a rate of 610,000.

Brent crude oil for December settlement declined as much as 61 cents, or 0.8 percent, to $76.63 a barrel on the London-based ICE Futures Europe exchange, and was at $76.69 at 9:27 a.m. Singapore time.

Gold May Decline in Asia as Dollar’s Advance Reduces Demand

Oct. 21 (Bloomberg) -- Gold, little changed in Asia, may decline as the dollar climbed for a second day, sapping demand for commodities including the precious metal.

The Dollar Index, which tracks the currency against those of six major trading partners, gained after reports showed that U.S. builders broke ground on fewer-than-estimated homes and wholesale prices unexpectedly fell. Gold, which touched a record on Oct. 14, typically moves inversely to the dollar.

“The gold market is taking its cue from an upturn in the dollar,” said Kim Jae Jun, a trader with Eugene Investment & Futures Co. in Seoul. “After a recent rally to records, market participants have turned a bit uneasy about chasing further.”

Gold for immediate delivery traded at $1,054.30 an ounce at 9:18 a.m. in Singapore compared with yesterday’s close of $1,055.20 and the all-time high of $1,070.80. December gold futures fell 0.4 percent to $1,054.50 an ounce on the New York Mercantile Exchange’s Comex division.

Asian stocks fell, snapping a two-day advance, and oil declined to less than $79 a barrel in New York on concern that the recovery in the U.S. economy may be faltering. The Dollar Index rose to a high of 75.597, paring its decline over the past year to about 10 percent.

U.S. housing starts rose 0.5 percent to an annual rate of 590,000 from 587,000 in August, a Commerce Department report showed. Prices paid to factories, farmers and other producers fell 0.6 percent, the Labor Department said.

Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, were unchanged at 1,109.31 metric tons as of Oct. 20, according to the company’s Web site.

Among other precious metals, silver shed 0.4 percent to $17.42 an ounce, platinum was little changed at $1,349.75 an ounce and palladium weakened 0.7 percent to $334.25 an ounce.

Dollar Strengthens for Second Day Against Euro as Stocks Slide

Oct. 21 (Bloomberg) -- The dollar gained for a second day versus the euro as regional stocks extended losses in U.S. shares, sapping demand for higher-yielding assets.

The euro also retreated from a 14-month high against the dollar on speculation European policy makers will today reiterate their concerns that the currency’s gains are hurting the region’s economic recovery. The New Zealand dollar erased declines as Governor Alan Bollard said strength in the so-called kiwi isn’t an impediment to the central bank raising rates.

“The stock market continues to dominate the currency market and affect its direction,” said Toshiya Yamauchi, a manager of the foreign-exchange margin-trading department at Ueda Harlow Ltd. in Tokyo. “We need to watch for a possible reversal of risk trade or short positions on the dollar.” A short position is a bet that an asset will fall.

The dollar traded at $1.4921 per euro at 9:53 a.m. in Tokyo from $1.4945 yesterday in New York, when it touched $1.4994, the weakest level since August 2008. The greenback was at 90.91 yen from 90.78 yen. The euro bought 135.68 yen from 135.66.

New Zealand’s dollar was at 74.93 U.S. cents from 74.96 cents yesterday after earlier falling as much as 0.4 percent. It yesterday touched 75.76, the most since July 2008. It bought 68.03 yen from 68.04.

The MSCI Asia Pacific Index of regional shares slid 0.4 percent and the Nikkei 225 Stock Average lost 0.1 percent. The Standard & Poor’s 500 Index lost 0.6 percent yesterday in New York, retreating from a one-year high.

Stocks Decline

Stocks fell after the U.S. Commerce Department said housing starts rose 0.5 percent to an annual rate of 590,000 in September from a 587,000 pace in August. Economists had forecast starts increased to a 610,000 rate. Prices paid to factories, farmers and other producers fell 0.6 percent, the second drop in three months, the Labor Department said.

Demand for the euro fell after European Central Bank President Jean-Claude Trichet said Oct. 19 after a meeting of euro-area finance ministers in Luxembourg that “excessive volatility” in currencies is “bad for economic development.”

Henri Guaino, an aide to French President Nicolas Sarkozy, also said yesterday a euro exchange rate of $1.50 “is a disaster for the European economy and manufacturing sector.”

“European officials are expressing worry that the euro’s appreciation is making things difficult for their economy,” said Yuji Saito, head of the foreign-exchange group in Tokyo at Societe Generale SA, France’s third-largest bank. “This is causing the euro to undergo a downward correction.”

Sarkozy will hold a weekly cabinet meeting at 10 a.m. in Paris, and European Commission President Jose Barroso will speak to the European Parliament at 9 a.m. in Strasbourg, France.

The euro has strengthened 15 percent versus the dollar in the past 6 months, making the region’s exports more expensive to overseas buyers.

IFO

Losses in the euro may be limited before a report this week forecast to show business confidence in Germany improved, adding to signs that the recovery is gaining momentum.

The Ifo institute’s business climate index, based on a survey of 7,000 executives, climbed to 92 in October from 91.3 the previous month, according a survey of economists. The Munich-based institute will release the report Oct. 23.

The kiwi trimmed earlier losses after Governor Bollard told Radio New Zealand the currency’s gains are being driven by a weak U.S. dollar and money markets. He said on Sept. 10 he didn’t expect to raise rates until “the latter part of 2010.”

Traders are betting that New Zealand’s central bank will raise its benchmark rate by 2 percentage points over 12 months, according to a Credit Suisse Group AG index based on swaps.

Benchmark interest rates are 2.5 percent in New Zealand and 3.25 percent in Australia, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits.

Palm Oil Trades Near Six-Week High as Crude Oil Surpasses $80

Oct. 20 (Bloomberg) -- Palm oil gained for a third day and traded near its highest level in almost six weeks as crude oil exceeded $80 a barrel for the first time in more than a year, increasing palm’s attraction as an alternative fuel.

“The entire oilseed complex is upbeat about rising crude oil prices,” said Harish Galipelli, head of research at Kochi- based JRG Wealth Management, which advises traders. “Crude oil is getting costlier, which will push up demand for biofuels.”

Palm oil may climb to 2,300 to 2,350 ringgit ($685 to $700) a metric ton in the next two weeks, Galipelli said in a phone interview today. The cooking oil has gained 30 percent this year, less than half the 79 percent advance in crude.

Palm oil for January delivery rose as much as 0.9 percent to 2,216 ringgit a ton today and traded at 2,204 ringgit by the midday close at 12:30 p.m. on the Malaysia Derivatives Exchange. Crude oil was up as much as 0.6 percent to $80.05 a barrel in New York and traded at $79.75.

Soybean oil was 26 percent more expensive than palm oil, up from 9.7 percent on May 13, according to Bloomberg data, increasing the appeal of palm for cooking.

Exports of palm oil by Malaysia, the second-biggest producer, grew 1.8 percent in the first 20 days of October, independent market surveyor Intertek said today. A total of 812,095 metric tons were tracked from Oct. 1 to Oct. 20, versus 797,929 tons in the same period in September.

The 2,216 ringgit high for palm oil futures today was 4 ringgit below the 50-day moving average of 2,220 ringgit, according to data compiled by Bloomberg.

Exports from Indonesia, the largest producer, dropped 16 percent to 1.36 million tons in September from the previous month as local markets were closed for several days because of religious holidays, according to Susanto, marketing head of the Indonesian Palm Oil Association.

Shipments in the first nine months gained 16 percent to 11.4 million tons, the trade group said yesterday.

Oil Trades Near a One-Year High on Economic Recovery Optimism

Oct. 20 (Bloomberg) -- Crude oil traded near a one-year high in New York after rising above $79 a barrel on optimism demand will increase amid improved prospects for an economic recovery in the U.S., the world’s biggest energy user.

Oil advanced 1.4 percent yesterday as U.S. stocks climbed on better-than-estimated earnings and speculation the economy is healthy enough for policy makers to unwind efforts to shore up the financial system. The dollar weakened, increasing the appeal of commodities as an alternative investment.

“The underlying factors are all still in play,” said Mike Sander, an investment adviser at Sander Capital in Seattle. “A robust economic outlook on the back of a weak dollar is helping to boost the stock market and in turn, both factors are supporting higher oil prices.”

Crude oil for November delivery was at $79.52 a barrel, down 9 cents, in electronic trading on the New York Mercantile Exchange at 8:58 a.m. Singapore time. Prices settled at $79.61 yesterday, the highest close since Oct. 13, 2008. The November contract expires today. The more actively traded December contract was at $79.86 a barrel, down 10 cents.

Prices have gained 24 percent in the past three months as a recovery in equity markets emboldened investors, and the sliding U.S. dollar prompted buying of commodities. The dollar traded at $1.4973 per euro as of 9:35 a.m. in Tokyo from $1.4965 in New York yesterday after earlier declining to $1.4981, the weakest since August 2008.

The Standard & Poor’s 500 Index rose 0.9 percent to 1,097.91 in New York yesterday and the Dow Jones Industrial Average climbed 1 percent to 10,092.19. Australia’s benchmark S&P/ASX 200 Index gained 1.2 percent at 11:12 a.m. Sydney time.

Gasoline Supplies

Gasoline inventories probably declined for a second week, falling 1.5 million barrels in the week ended Oct. 16, according to the median of seven estimates by analysts surveyed by Bloomberg News before the Energy Department’s report tomorrow.

Futures climbed last week after a report from the Department showed an unexpected decline in stockpiles of gasoline as refineries idled units. The decrease was the steepest since Hurricanes Gustav and Ike shut refineries representing about a fifth of U.S. capacity in September 2008.

Inventories of crude oil probably rose 1.5 million barrels last week from 337.8 million, the survey showed.

Brent crude oil for December settlement traded at $77.71 a barrel, down 6 cents, on the London-based ICE Futures Europe exchange at 8:47 a.m. Singapore time. Yesterday, the contract rose 78 cents, or 1 percent, to $77.77.

Gold Price May Decline as Rally Prompts Some Investors to Sell

Oct. 20 (Bloomberg) -- Gold, little changed in Asia, may decline on speculation that the precious metal’s recent rally to a record is prompting some investors to sell their positions.

“While many speculators had rushed to jump onto the bandwagon, an expanding minority of short-term oriented investors is betting on falling gold prices,” Eugen Weinberg, a senior analyst with Commerzbank AG, wrote in a note.

Hedge funds and other large speculators hold their most- bullish position ever in futures, helping to propel gold’s gains for the year to about 21 percent as a weaker dollar and rising government debt spurred concern that inflation may accelerate. Spot gold touched an all-time high of $1,070.80 on Oct. 14.

Gold for immediate delivery was at $1,063.63 an ounce at 8:40 a.m. in Singapore, after trading between a loss of 0.2 percent and a gain of 0.1 percent. The Dollar Index, down 7.5 percent this year, was little changed at 75.217.

So-called net-long positions, or bets prices will rise, increased 6 percent to 253,955 contracts in the week ended Oct. 13, according to data from the Commodity Futures Trading Commission.

To be sure, gold will average $1,200 an ounce in the third quarter of next year, Standard Chartered Bank forecast yesterday. UBS AG lifted its 1-month estimate to $1,000 an ounce, from $950, and its 3-month forecast for the metal to $1,050, from $1,000.

“Physical demand for gold from jewelry clients, although generally light over the past six weeks, has been seen in good strength on corrections in the price,” John Reade, an analyst with UBS AG, said in a report.

Among other precious metals, silver was little changed at $17.83 an ounce, platinum rose 0.3 percent to $1,361.75 an ounce and palladium weakened 0.1 percent to $333.25 an ounce.

Dollar Trades Near Lowest in 14 Months as Risk Appetite Rises

Oct. 20 (Bloomberg) -- The dollar traded near the lowest in more than a year against the euro as signs the global economy is recovering boosted demand for higher-yielding assets. Australia’s dollar touched a 14-month high after its central bank said keeping borrowing costs low was no longer necessary.

The euro advanced for a ninth day against the yen as Asian stocks continued a global rally and before reports this week economists said will show the U.S. housing market and German business confidence improved, damping demand for Japan’s currency as a shelter from the recession.

“A mood of euphoria is at work as prospects improve for corporate profits and the economy,” said Mitsuru Saito, Tokyo- based chief economist at Tokai Tokyo Securities Co. “Given also the likelihood that the Federal Reserve will maintain its accommodative monetary stance, riskier assets will continue to fare well at the expense of funding currencies.”

The dollar traded at $1.4976 per euro as of 10:19 a.m. in Tokyo from $1.4965 in New York yesterday after earlier declining to $1.4981, the weakest since August 2008. The U.S. currency bought 90.47 yen from 90.55. The euro was at 135.48 yen from 135.51 yen.

Australia’s currency was at 92.83 U.S. cents from 92.92 cents yesterday. It earlier climbed to 93.11 cents, the highest since August 2008. New Zealand’s dollar traded at 75.42 U.S. cents after earlier touching 75.76 cents, the strongest since July 2008.

Benchmark Rates

A “very expansionary setting of policy was no longer necessary, and possibly imprudent,” policy makers said in minutes of their Oct. 6 meeting, released today in Sydney. The risks in waiting to raise borrowing costs “had increased.”

Central bank Governor Glenn Stevens and his board raised the benchmark rate by a quarter percentage point to 3.25 percent and signaled further increases as soon as next month.

Benchmark interest rates of 0.1 percent in Japan and as low as zero in the U.S. make the yen and dollar favorite funding currencies for so-called carry trades, in which investors borrow where interest rates are relatively low and buy assets in nations where returns are higher. The risk in such trades is that currency-market moves can erase profits.

Stocks Advance

The MSCI Asia Pacific Index of regional shares advanced 0.9 percent and the Nikkei 225 Stock Average gained 1 percent. The Dow Jones Industrial Average rose 1 percent yesterday.

Stocks advanced globally on improved prospects for U.S. corporate earnings. Analysts surveyed by Bloomberg estimate profits for companies in the Standard & Poor’s 500 Index will rise 65 percent in the last three months of the year after falling for nine straight quarters, the longest streak since the Great Depression.

Earnings at U.S. companies will probably exceed analysts’ third-quarter estimates, extending a rally in stocks to year- end, Nomura Holdings Inc. wrote in a note dated Oct. 16. Thirty- four of the 41 companies in the S&P 500 that reported since Oct. 7 surpassed analysts’ projections, according to Bloomberg data.

U.S. housing starts rose to an annual rate of 610,000 in September from 598,000 in August, according to a Bloomberg News survey of economists before the Commerce Department report today. The Ifo institute’s business climate index, based on a survey of 7,000 executives, probably rose to 92 in October from 91.3 the previous month, according to a separate survey. The Munich-based institute will release the report on Oct. 23.

Fed Signals

Demand for the dollar may also weaken after the Federal Reserve signaled in a statement yesterday that it will keep borrowing costs down while assessing ways to drain money from the banking system.

The Fed said it’s working with market participants to assess the use of reverse repurchase agreements to withdraw some of the record amounts of cash it added to the financial system.

“This work is a matter of prudent advance planning by the Federal Reserve, and no inference should be drawn about the timing of monetary-policy tightening,” the statement said.

Losses in the dollar were tempered after French Finance Minister Christine Lagarde repeated calls by France and other euro-area countries for a strong dollar, saying ministers agreed to take a common position at meetings in Luxembourg.

“We want a strong dollar, we need a strong dollar,” Lagarde told journalists after the meeting. “We must remain disciplined” on our message, she said.

Lagarde also said that euro-area countries agreed to begin ending their economic stimulus programs in 2011, provided “conditions stabilize.”

Gains in the euro were limited on speculation the 16- nation region’s finance ministers will reiterate concern over the European currency’s recent gains at a two-day meeting that ends today.

Euro ‘Problem’

Luxembourg Treasury Minister Jean-Claude Juncker, who is leading the meeting of euro-area finance chiefs, said yesterday the ministers “discussed exchange rates extensively,” adding that “it’s a problem which worries us.” Juncker and European Central Bank President Jean-Claude Trichet will travel to China with European Union Monetary Affairs Commissioner Joaquin Almunia before the end of the year to discuss currencies, Juncker said.

“Policy makers may express worries that the euro is too strong, especially against China’s renminbi,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. Ltd. in Tokyo. “Further euro appreciation will likely hurt the euro- zone’s exports more.”

The euro has gained 16 percent against the dollar and the renminbi in the past six months, making the region’s exports more expensive to overseas buyers and threatening the recovery from the worst recession since World War II.

FCPO Commentary on 20/10/09

CPO 3rd month Jan futures contract traded RM19 higher as compare to previous trading sessions to close at RM2197 with a total of 9,586 lots traded in the market. CPO price was mainly traded sideways after opened higher during 1st trading sessions despite soybean oil electronic trading was traded higher.
Technically, CPO daily price chart seems formed a Doji formation after long consolidation throughout entire trading sessions. Based on our technical analyst, our opinion suggests CPO price would search for support around RM2170 and RM2184 regions in the coming trading sessions before would surge higher. Traders were advice to long on dip in the coming trading session provided support levels at RM2110 were not violated. Resistance levels were seen at RM2220 and RM2251 regions.

FKLI Commentary on 20/10/09

FKLI Oct Futures contract traded 2 points higher at 1265 levels as compare to previous trading session to with a total of 3,750 lots traded in the market. FKLI was traded higher during trading sessions due to strong support from regional indices despite was opened lower on morning sessions as Dow Jones were retract slightly after 1st attempt to penetrate psychology levels at 10,000 levels.
Technically, as of our expectation, FKLI were traded higher after seems supported above 1256.5 regions while being resisted around resistance levels at 1266 regions. Based on our technical analyst on FKLI, our opinion suggests FKLI would continue to trade higher in the coming trading sessions provided nearest support levels at 1262 and 1256 were not violated during trading sessions. Traders were advice to hold long position while be cautious around resistance levels at 1268 and 1276 regions.

Oil Trades Little Changed After Rising Above $79 on Demand Gain

Oct. 19 (Bloomberg) -- Crude oil traded little changed in New York after rising above $79 a barrel for the first time in a year on speculation demand will increase as the global economy recovers from recession.

Oil climbed as high as $79.05 before a report that may show confidence among home builders in the U.S., the world’s largest energy user, is at its highest in 17 months, according to economists surveyed by Bloomberg News.

“Overall oil’s looking very positive, reacting to a pretty good stream of new economic data coming out of the U.S., which is starting to show signs of picking up,” said Geoff Clear, head of Asian commodities at Australian & New Zealand Banking Group Ltd. in Singapore. Crude will be trading “at more normalized prices around the $80 mark,” he said.

Crude oil for November delivery was at $78.76 a barrel, up 23 cents, in after-hours electronic trading on the New York Mercantile Exchange at 3:07 p.m. Singapore time. Prices earlier rose as much as 52 cents, or 0.7 percent, to $79.05, the highest since Oct. 15, 2008.

The contract, which expires tomorrow, jumped 1.2 percent to $78.53 a barrel on Oct. 16 after a report showed U.S. industrial production climbed more than economists expected last month. The more widely held December contract was at $79.16 a barrel, up 14 cents, at 3:08 p.m.

Last week, oil futures posted their biggest weekly gain in almost two months as U.S. refiners cut operating rates to a six- month low to clear gasoline and distillate stockpiles.

U.S. Inventories

Oil prices have increased 23 percent in the past three months even as U.S. fuel stockpiles climbed. Prices rose as a recovery in equity markets emboldened investors and the sliding U.S. dollar prompted investors to buy commodities.

U.S. distillates supplies, including diesel and heating oil, fell from a 26-year high in the week ended Oct. 9, the Energy Department reported last week. At 170.7 million barrels, they were 30 percent above the five-year average for the period.

“Inventory levels are still relatively high,” said David Moore, a commodity strategist at Commonwealth Bank of Australia Ltd. in Sydney. “Ultimately we’ll see oil prices drifting lower again, maybe under $70 a barrel even, because the market is relatively well supplied.”

Brent crude oil for December settlement rose as much as 33 cents, or 0.4 percent, to $77.32 a barrel on the London-based ICE Futures Europe exchange, and was at $77.20 at 3:08 p.m. Singapore time.

“This week’s DOE report has had mixed results for refined products,” Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut, said in a note to clients. “If this week follows historical trends, we should see a bounce back up in both crude oil imports and in refinery utilization.”

OPEC Production

There is no shortage of oil and OPEC won’t increase output to quell price gains driven by speculators, Secretary-General Abdalla El-Badri told the Wall Street Journal on Oct. 16.

The Organization of Petroleum Exporting Countries pumps about 40 percent of the world’s oil and last year slashed output quota by 4.2 million barrels a day to prevent a global glut.

Last week, OPEC’s El-Badri said prices between $65 and $75 were sufficient to maintain investment and development within the industry.

The latest jump in prices “has nothing to do with the shortage in the oil market,” he told the Wall Street Journal. Regulators must take action to avert the speculation that pushed prices to records last year, he said.

“Speculation must be prevented from going wild as it happened in 2008,” he told the newspaper. Oil reached a record $147.27 a barrel in New York in July 2008.

Hedge-fund managers and other large speculators increased their bets on rising oil futures to a nine-month high last week, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 68,836 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions rose by 18,830 contracts, or 38 percent, from a week earlier.

“The market is pricing in a very big upturn in demand in order to draw down all that product, and I just think it’s a little optimistic at this point,” said Ben Westmore, an energy and minerals economist at National Australia Bank Ltd. in Melbourne.

FKLI Commentary on 191009

FKLI Oct Futures contract surge 17.5 points higher at 1263 levels as compare to previous trading session to with a total of 4,002 lots traded in the market. FKLI was traded higher during 2nd trading session as most of the regional indices were closed higher during trading sessions.

Technically, FKLI price manages to breach previous resistance levels at s at 1256.5 during trading sessions. Based on our technical view, our opinion suggests FKLI would affirm to trade higher provided
support levels at 1256.5 and 1242.5 were not violated during trading sessions.
Traders were advice to hold long position in the coming trading sessions while be cautious around resistance levels at 1266 and 1274 regions.

FCPO Commentary on 191009

CPO 3rd month Dec futures contract surge RM67 higher as compare to previous trading sessions to close at RM2178 with a total of 12,068 lots traded in the market. CPO price was mainly traded sideways during most of the trading sessions but manage to surge up later before market was closed for trading.

Technically, CPO price surge higher after manage to retrace 50% Fibonacci support at RM2140 regions. Based on our technical view, our opinion suggests FKLI would likely to trade higher in the coming trading session provided support levels at RM2140 and RM2128 were not violated. Traders were advice to long position provided support levels were not violated during trading sessions while be cautious around resistance levels at RM2180 and RM2200 regions.

Crude Oil Rises for Eighth Day on Speculation Demand Recovering

Oct. 19 (Bloomberg) -- Crude oil climbed above $79 a barrel in New York for the first time in a year, rising for an eighth day on speculation demand will increase as the global economy recovers from recession.

A report today may show confidence among home builders in the U.S., the world’s largest oil consumer, is at its highest in 17 months, according to economists surveyed by Bloomberg News. There is no shortage of oil and OPEC won’t increase output to quell price gains driven by speculators, Secretary-General Abdalla El-Badri told the Wall Street Journal on Oct. 16.

“The economic numbers are looking better and a lot of that seems to have already been priced in,” said Ben Westmore, energy and minerals economist at National Australia Bank Ltd. in Melbourne. “There is still a big question mark over how much of that, especially in the U.S. and China, is being driven by the stimulus packages.”

Crude oil for November delivery rose as much as 52 cents, or 0.7 percent, to $79.05 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the highest since Oct. 15 2008. It traded at $78.98 at 7:10 a.m. in Singapore.

The contract, which expires tomorrow, jumped 1.2 percent to $78.53 a barrel on Oct. 16 after a report showed U.S. industrial production climbed more than economists expected last month. The more widely held December contract jumped 38 cents to $79.40 today.

Oil futures posted their biggest weekly increase in almost two months last week as U.S. refiners slashed operating rates to a six-month low to clear above-average gasoline and distillate stockpiles. Gains accelerated after prices closed above the August high of $75, encouraging fresh buying by funds.

U.S. Inventories

Oil prices have gained 23 percent the past three months, even as U.S. fuel stockpiles climbed. Prices rose as a recovery in equity markets emboldened investors and the sliding U.S. dollar prompted investors to buy physical assets.

U.S. distillates supplies, including diesel and heating oil, fell from a 26-year high in the week ended Oct. 9, the Energy Department reported last week. At 170.1 million barrels they were 30 percent above the five-year average for the period.

“The market is pricing in a very big upturn in demand in order to draw down all that product, and I just think it’s a little optimistic at this point,” National Australia’s Westmore said. “A lot of the run-up has just been a result of both following the equity markets and the weak dollar.”

Brent crude oil for December settlement rose 33 cents, or 0.4 percent, to $77.32 a barrel on the London-based ICE Futures Europe exchange. It gained 1 percent to $76.99 on Oct. 16.

OPEC Production

The Organization of Petroleum Exporting Countries pumps about 40 percent of the world’s oil and last year slashed output quota by 4.2 million barrels a day to prevent a global glut.

Last week, OPEC’s El-Badri said prices between $65 and $75 were sufficient to maintain investment and development within the industry.

The latest jump in prices “has nothing to do with the shortage in the oil market,” he told the Wall Street Journal. Regulators must take action to avert the speculation that pushed prices to records last year, he said.

“Speculation must be prevented from going wild as it happened in 2008,” he told the newspaper. Oil reached a record $147.27 a barrel in New York in July 2008.

Hedge-fund managers and other large speculators increased their bets on rising oil futures to a nine-month high last week, according to U.S. Commodity Futures Trading Commission data.

Speculative net-long positions, the difference between orders to buy and sell the commodity, jumped 38 percent to 68,836 contracts in the week ended Oct. 13, the highest since Jan. 9, the commission reported last week. Open interest in Nymex oil futures is at a 15-month high.

Gold Rebounds in New York on Bets Dollar Will Extend Slump

Oct. 16 (Bloomberg) -- Gold prices rebounded in New York on speculation that the dollar will extend a slump, enhancing the appeal of the precious metal as an alternative asset.

The greenback is headed for the second straight weekly loss against a basket of six major currencies. Before today, gold rose 19 percent this year, while the dollar dropped 7.2 percent.

“On any type of dip, there will be buyers,” said Tom Hartmann, an AltaVest Worldwide Trading LLC analyst in Mission Viejo, California. “People want exposure to gold. Gold is directly dependent on the direction of the dollar, and over the long term, the dollar is headed lower.”

Gold futures for December delivery rose 90 cents, or 0.1 percent, to $1,051.50 an ounce on the New York Mercantile Exchange’s Comex division. Earlier, the metal fell as much as 0.7 percent. Prices rose 0.3 percent this week, the third straight weekly increase for the most-active contract.

The U.S. Dollar Index, the six-currency gauge, pared gains today after jumping as much as 0.6 percent.

President Barack Obama has raised U.S. marketable debt to a record $7.01 trillion as he borrows to revive the world’s biggest economy. The Federal Reserve has kept its target rate for overnight bank loans at zero to 0.25 percent for almost a year.

Confidence among U.S. consumers dropped more than forecast in October, indicating concern that an economic recovery will be fragile.

“Gold represents an asset which can protect investors from both inflationary and deflationary threats,” Deutsche Bank AG said in a report.

Gold will average $1,140 next year, up 8 percent from a previous estimate, because of “strong investor inflows,” Standard Chartered Plc said in a report. The bank raised its forecast for this quarter by 4.8 percent to $1,100.

“Longer term, gold has all the pieces of the puzzle to go much higher,” said Matt Zeman, a LaSalle Futures Group metals trader in Chicago. “In the short term, no one wants to buy on strength. The lack of follow-through buying is a disappointment if you’ve been long.”