Oil Is Little Changed as Rising Dollar Dims Commodities' Appeal

By Alexander Kwiatkowski

Sept. 11 (Bloomberg) -- Crude oil was little changed, giving up earlier gains, as the dollar rose to a one-year high against the euro, reducing the appeal of commodities as a hedge.

Crude oil for October delivery traded at $102.41 a barrel, down 17 cents in electronic trading on the New York Mercantile Exchange at 9:10 a.m. London time. It earlier rose as much as $1.37 on concern Hurricane Ike would threaten oil production as it enters the Gulf of Mexico.

Oil fell after the dollar rose to a one-year high against the euro on speculation that growth in Europe will slow more than in the U.S. Investors looking to hedge against the dollar's decline helped lead crude oil and other commodities to records earlier this year. The situation reversed in the past month as the dollar rallied against the euro.

The U.S. currency climbed to $1.3924 per euro, the strongest since Sept. 18, 2007, before trading at $1.3930 as of 8:57 a.m. in London from $1.3998 late yesterday in New York.

Crude has fallen about 30 percent from a record $147.27 a barrel on July 11 as high prices and slowing global economic growth reduce demand for fuels.

Hurricane Ike was about 325 miles south-southeast of the Mississippi river and had sustained winds near 100 miles per hour (160 kilometers per hour), the National Hurricane Center said in its latest advisory at 11 p.m. Miami time. The storm is expected to move through the center of the Gulf of Mexico, missing the offshore Louisiana oil and natural gas fields, and make landfall in Texas.

To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net