NEW YORK (Reuters) - Oil rose nearly 3 percent on Monday, extending gains into a fourth straight session after a strike halted Kuwait’s crude exports and France and Germany pledged to come up with a plan to tackle the euro zone crisis.
German Chancellor Angela Merkel and French President Nicolas Sarkozy promised on Sunday to unveil by the end of October a comprehensive new package to resolve the debt crisis, which has dragged on oil and other commodities for months.
Optimism toward a crisis resolution helped push up Brent more than 9 percent over the past four sessions, the biggest four-day gain since August 2009 as investors sold the dollar and put cash into equities and commodities.
“There’s an assumption there will be some kind of resolve in the euro zone crisis,” said Richard Ilczygszyn, senior market strategist for MF Global in Chicago.
“We are seeing the shorts run for the hills in the euro and all foreign currency versus the dollar. It brings up equities and the green light for commodities is on right now.”
Further support came after shipping sources said all oil tanker traffic from Kuwait, one of the world’s top five oil exporters and a large supplier to Asia, had stopped as a customs union went on strike.
November Brent crude futures settled $3.07 higher at $108.95 a barrel, above the 20-day moving average. U.S. November crude traded up $2.43 to settle at $85.41 a barrel, breaking through the 20-day and 50-day moving averages.
With oil investors closely watching the wider economy for signals, U.S. crude’s negative correlation to the U.S. dollar has increased, touching the highest since November 2008 on a 25-day basis.
Brent trading volumes held close to the 30-day average, exceeding those U.S. futures, which were 30 percent below that average. Oil’s gains were part of a wider commodity rally that saw gold up more than 2 percent to near its highest in two weeks, while copper notched a fourth day of gains.
Traders also weighed other supply factors, including word from Saudi Arabia’s oil minister Ali al-Naimi over the weekend that OPEC’s top exporter had cut production to 9.39 million barrels per day from 9.8 million bpd in August.
But Naimi said he did not see a decline in the kingdom’s exports as Libya restored production disrupted by civil war.
The loss of Libyan oil exports, an important feedstock for European refiners, has helped push international benchmark Brent crude to a record premium to U.S. oil futures this year.
The International Energy Agency said Libya may be able to return to its pre-war-level oil output earlier than 2013 if oil companies resume activities there as quickly as they seem to be doing.
Additional support for Brent crude came after Shell (RDSa.L) declared force majeure on exports of Nigerian Forcados crude for October to December following a sabotage attack on a major pipeline.
A Reuters poll of analysts ahead of weekly inventory data forecast a 700,000-barrel build in crude inventories for the week to October 7 due to a rebound in imports and lower refinery utilization, while distillate and gasoline stockpiles were seen falling.
Inventory data will be delayed due to the Columbus Day holiday in the United States, with the American Petroleum Institute report due out on Wednesday, and the Energy Information Administration’s report coming out on Thursday.
Reporting by Matthew Robinson, David Sheppard and Robert Gibbons in New York; Zaida Espana in London; Florence Tan in Singapore; Editing by Dale Hudson, Marguerita Choy and Bob Burgdorfer