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Oil ends at 2010 peak as dollar slips vs euro
March 31, 2010 / 2:00 AM / 7 years ago

Oil ends at 2010 peak as dollar slips vs euro

<p>Drivers load gasoline at a local gas-station during a blackout in Santiago, March 14, 2010. REUTERS/Ivan Alvarado</p>

NEW YORK (Reuters) - Oil rose above $83 on Wednesday, lifted to its highest close since October 2008 as the euro’s rise against the dollar offset government data showing crude inventory rose more than expected and gasoline stocks had a surprise build.

U.S. crude futures finished the first quarter of 2010 up $4.40, or 5.54 percent, from the end of 2009. It was the fifth consecutive quarterly gain for crude futures.

Front-month May crude futures on the New York Mercantile Exchange rose $1.39, or 1.69 percent, to settle at $83.76 a barrel, a third consecutive higher finish and the highest close since crude ended at $83.76 on October 9, 2008.

The intraday high of $83.85 closed in on the 2010 peak price of $83.95 hit on January 11, which also was the highest intraday price since October 2008.

On Wednesday, Brent crude for May rose $1.42 to settle at $82.40 a barrel.

The dollar fell against the euro, though the greenback hit a three-month high versus the yen. The dollar weakened against a basket of currencies .DXY but was on track for its best quarterly performance against the basket in 12 months.

Wednesday’s U.S. Energy Information Administration oil inventory report showed crude oil stocks rose by 2.9 million barrels to 354.2 million barrels last week. The increase topped the forecast for a rise of 2.4 million barrels, while gasoline inventories logged a modest but surprise gain.

The EIA report also showed a much bigger increase in crude stocks than the rise of 421,000 barrels reported a day earlier by industry group the American Petroleum Institute.

“On the surface you would think this is a bearish report, especially with gasoline showing an unexpected build,” Mike Zarembski, senior commodities analyst at Optionsxpress in Chicago, said.

“But traders are focusing on the weakness in the U.S. dollar today, which is keeping commodity prices in general up.”

The U.S. stock market ended lower as weak jobs and manufacturing data offset strength in the energy sector.

The U.S. shed 23,000 private-sector jobs in March, against expectations for a rise, a report by ADP Employer Services showed on Wednesday.

Business activity in the U.S. Midwest expanded less than expected in March.

QUARTERLY GROWTH

U.S. oil demand has shown signs of recovery and China’s imports have increased, giving market bulls hope for sustained growth by the world’s top two oil consumers.

After the biggest annual rise in 36 years in 2009, most commodities continued to rebound on general optimism that the economy is recovering and demand will continue to improve.

Oil prices this quarter traded from that $83.95 peak in January to as low as $69.50 a barrel in February.

That sub-$15 range is more stable than the wide price swings in the previous two years. Implied volatility for U.S. crude is now at its lowest level since prices surged to a record $147.27 a barrel on July 11, 2008, before plummeting to $32.40 in December of that year.

But Saudi Arabian Oil Minister Ali al-Naimi on Wednesday told the International Energy Forum in Cancun, Mexico, that oil market predictability was being harmed by demand uncertainty and nontransparent financial markets.

Additional reporting by Gene Ramos and Edward McAllister in New York; Chris Baldwin in London, Alejandro Barbajosa in Singapore; Editing by David Gregorio

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