Oil rises on winter supply concerns
NEW YORK (Reuters) - Oil rose to over $80 on Tuesday on concerns about consumer-nation supplies ahead of the coming Northern Hemisphere winter.
European oil product inventories fell in September, industry monitor Euroilstock reported, while the U.S. government said heating demand will be higher this year than last due to forecasts for cooler weather.
The reports boosted U.S. crude futures, which reversed Monday's big sell-off, settling up $1.24 to $80.26 a barrel after trading as high as $81.10. London Brent crude gained 91 cents to $77.49 a barrel.
European distillate stocks in September fell 5.25 million barrels, or 1.3 percent, from August, while gasoline stocks fell 6.80 million barrels, or 5.2 percent, from a year earlier, according to Euroilstock.
The U.S. Energy Information Administration said consumers in the world's top energy market will pay 10 percent more to warm their homes this winter than last year due to cooler weather.
"This morning's EIA report was taken as supportive for prices on the expectations for increased demand," said Eric Wittenauer, analyst at A.G. Edwards.
Adding support to commodities, the dollar fell against the euro on Tuesday after a two-day rally.
"It's also being supported by the dollar, which is giving back some of the gains it has had over recent days. That's also supporting commodities across the board, industrial metals and gold are up," Wittenauer added.
Some investors had bought crude and commodities in recent weeks as a hedge against the weaker dollar, which reached multi-year lows against other major currencies following a cut in U.S. interest rates last month.
Support also came after Turkey's prime minister gave the green light on Tuesday for possible military action in northern Iraq to attack Kurdish rebels in the OPEC country.
Analysts also were looking for direction from U.S. weekly government inventory data, which experts on Tuesday forecast would show a 900,000-barrel build in crude stocks, a 400,000-barrel distillate draw and a 100,000-barrel build in gasoline inventories when it is released on Thursday.
(Additional reporting by Luke Pachymuthu in Singapore and Santosh Menon in London)
