Oil rises on Saudi view, Greek incidents, China

NEW YORK Mon Nov 1, 2010 4:15pm EDT

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NEW YORK (Reuters) - Oil prices rose nearly 2 percent on Monday after comments by Saudi Arabia about consumers tolerating oil prices as high as $90 a barrel and unease about a bombs found in Greece fueled earlier gains.

"Consumers are looking for oil prices around $70, but hopefully less than $90," Saudi Arabia's oil minister Ali al-Naimi said in comments following a speech in Singapore. "There's almost an anchor now for the price."

The comment was interpreted by brokers and analysts as signaling Saudi Arabia could allow prices to rise as high as $90, above the $70-$80 range the Kingdom had previously deemed satisfactory.

Data indicating better-than-expected manufacturing growth in China boosted oil early and the dollar's intraday weakness also helped push oil above $83 to a more than two-week peak.

U.S. crude for December delivery rose $1.52, or 1.87 percent, to settle at $82.95 a barrel, having reached $83.86.

In London, ICE December Brent crude rose $1.47 to settle at $84.62.

"Naimi's comment is probably the most convincing reason," Carsten Fritsch, analyst at Commerzbank in Frankfurt, said about U.S. oil futures' price spike intraday to near $84.

"It gives assurance that the Saudis won't do anything to prevent a further rise above $80," he added. "At least until prices exceed $90."

Trading volumes for U.S. crude and refined oil products futures were muted ahead of this week's Federal Reserve meeting expected to result in more monetary easing by the central bank and to keep pressure on the dollar.

Ahead of Naimi's comments, there was news that a parcel exploded in Athens and others were intercepted, following Friday's incidents where packages containing bombs were intercepted in Britain and Dubai on Friday.

"You have the weak dollar and China growth and the Fed, but there is concern about the cargo bombs. It's got shorts nervous and there is just the fear of the unknown," said Richard Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.

Oil received lift early on Monday from unexpectedly strong manufacturing data out of China.

The dollar index rose in afternoon trading in New York after seesawing. The greenback firmed against the euro and yen on stronger-than-expected U.S. manufacturing data.

The surprisingly strong U.S. manufacturing growth in October was probably too little, too late to prevent more monetary easing by the Federal Reserve.

The news of a quicker pace of factory growth was also tempered by a separate report showing U.S. personal income fell in September while consumer spending remained tepid.

FED EXPECTATIONS

The Fed is widely expected to announce new bond purchases, known as quantitative easing, to pump more money into the U.S. economy, when its two-day policy meeting ends on Wednesday.

But producers of dollar-denominated oil have voiced concerns about the battering recently given the U.S. dollar.

Since October, U.S. crude prices have been stuck in a $79-$85 trading range, narrower from the range in May, when both the 2010 low of $64.24 and the year's high of $87.15 were posted.

Ahead of the week's U.S. oil inventory reports, analysts surveyed by Reuters on Monday expected crude stockpiles to have risen last week for the fourth time in five weeks.

Gasoline stocks were expected to be little changed, while distillate stocks, including heating oil and diesel fuel, were expected to have fallen.

(Additional reporting by Gene Ramos in New York and Alex Lawler in London; Editing by Marguerita Choy)

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Comments (1)
garrisongold wrote:
Maybe western nations need to consider a “food” cartel and let those subjects in the oil kingdoms of the middle-east eat sand for a while. Just turn the tables on them and cut grain exports by 50 % and double the grain prices, while providing subsidies for the western consumer for the increase in price they pay.

This is basically the same strategy that the oil cartels have employed since the 70’s. Gouging us for actually providing the initial capital, technology and know-how to extract the oil they just happen to be setting on. And our governments just let it happen with no response. Think China will feed them? I doubt it, as they will have a big enough problem feeding themselves. When they cry “uncle” and want to trade fairly, we will do the same.

Before that, the were basically nomadic people riding around on camels and living in tents.

Nov 01, 2010 5:07pm EDT  --  Report as abuse
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