Oil jumps towards $83 as dollar weakens

Oil jumps towards $83 as dollar weakens

London: Oil jumped by a dollar towards $83 a barrel on Monday, gaining for a second session as the U.S. currency weakened after a Group of 20 meeting.

The dollar dropped, hitting a 15-year low against the yen, as the G-20 agreement to shun competitive currency devaluations was taken as a go-ahead to resume dollar selling by investors.

US crude for December climbed $1.16 to $82.85 a barrel at 3:20pm less than $2 from a five-month high of $84.43 reached on 7 October ICE Brent added $1.02 to $83.98.

“People are still selling dollars after the G-20 meeting and that is putting upside pressure on commodities," said Michelle Kwek, an analyst at Informa Global Markets in Singapore.

Among other commodities, gold rose more than 1% and copper reached a 27-month high in London.

Analysts said the G20 outcome suggested a return to the pre-existing status quo in currency markets, with the dollar staying under pressure due to expectations the Federal Reserve would unveil a second round of quantitative easing as early as November.

Investors are waiting for a speech by US Federal Reserve chairman Ben Bernanke at 6:00pm.

Oil has also been supported by strikes in France over pension and port reforms, which have reduced fuel supplies.

Workers at seven out of 12 French refineries voted to continue striking on Monday, unions said, while the remaining five are due to vote later in the day on whether to pursue strike action.

Oil traders were keeping an eye on the potential for weather disruption to supplies in the Gulf of Mexico.

Hurricane Richard struck the tiny Central American nation of Belize on Sunday. It was expected to weaken to a tropical depression and eventually pass through Mexico’s main oil-producing region in the Bay of Campeche.

Mexico’s state oil company, Pemex, said it was watching the storm but had not evacuated any workers from its offshore platforms.