Oil Prices Rise Above $95 a Barrel

Tuesday, Nov. 20, 2007 | 11:16 a.m.

Oil prices recovered Tuesday from an early dip as the U.S. dollar hit a new low against the euro, making oil futures attractive to investors using other currencies.

The euro has been climbing steadily against the dollar since August amid fears for the health of the U.S. economy, stoked by the subprime credit crisis.

In morning European trading the euro bought $1.4766, up from $1.4667 late Monday in New York. The euro hit its previous all-time high of $1.4752 on Nov. 9.

Light, sweet crude for January delivery rose 96 cents to $95.60 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe.

In London, January Brent crude futures added 89 cents to $93.17 a barrel on the ICE Futures exchange.

Early Tuesday, prices fell to $93.99 a barrel In New York on the belief that U.S. crude supplies rose last week, offsetting concerns that OPEC would not increase output.

"The market's watching pretty closely what the U.S. crude supply will look like in the near term," said Mark Pervan, senior commodity strategist at Australia & New Zealand Bank in Melbourne.

Analysts surveyed by Dow Jones Newswires, on average, predict this week's oil inventory report - to be released Wednesday by the U.S. Energy Information Administration - will say that crude oil inventories rose last week by 800,000 barrels.

Distillate stockpiles, which include heating oil and diesel fuel, are seen falling 400,000 barrels, and gasoline inventories are seen growing 700,000 barrels. Refinery use is expected to grow 0.4 percentage point to 88.1 percent of capacity.

The Nymex front-month crude contract closed 80 cents higher Monday at $94.64 a barrel after a late-session rally on concerns about whether the Organization of Petroleum Exporting Countries will boost output. Calls by Iran and Venezuela to have oil priced in a currency other than the U.S. dollar also lifted prices.

Recent statements from Saudi Arabia's oil minister have suggested the cartel may boost production to bring oil prices down.

But "there's a growing expectation that OPEC will be more resistant to calls to increase supply," Pervan said. "They're not happy about the weakening dollar."

Oil is priced in U.S. dollars and the currency's depreciation has worried oil producers because it has contributed to rising crude prices and has eroded the value of their dollar reserves. Cartel officials have resisted pressure to increase oil production to ease prices.

Traders also fretted about the possibility of a surprise decline in crude stockpiles or an overseas supply disruption during the long Thanksgiving holiday weekend. The Nymex will be closed Thursday and close early on Friday.

Heating oil futures climbed 2.21 cents to $2.6263 a gallon (3.8 liters) while gasoline prices rose 2.34 cents to $2.4050 a gallon.

Natural gas futures fell 6.5 cents to $7.722 per 1,000 cubic feet.

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Associated Press Writer Gillian Wong in Singapore contributed to this report.