Crude Oil Rises as Dollar Drops Against Euro, Stocks Advance

By Mark Shenk

Nov. 4 (Bloomberg) -- Crude oil rose as the dollar dropped against the euro, increasing the appeal of commodities, and as global stock indexes advanced.

Energy, metals and grains rose as the dollar's decline prompted investors to buy hard assets as an inflation hedge. Rising stocks in Europe and Asia sent the MSCI World Index to its sixth straight gain after company earnings eased concern that profit growth would stagnate.

``The dollar is moving lower against the euro, which is supporting all of the commodities,'' said Tom Bentz, senior energy analyst at BNP Paribas in New York. ``Stock markets are up as well, giving the oil market a further push.''

Crude oil for December delivery rose $2.50, or 3.9 percent, to $66.41 a barrel at 9:25 a.m. on the New York Mercantile Exchange. Prices, which have tumbled 55 percent since reaching a record $147.27 on July 11, are down 31 percent from a year ago.

Prices fell yesterday after data showed U.S. manufacturing shrank last month at the fastest pace in 26 years. Signs that the nation's economic slowdown will spread to emerging markets and curb fuel demand have sent oil prices lower.

``The overriding concern is the global economic situation and what that will mean for demand,'' said Gene McGillian, an analyst at TFS Energy LLC in Stamford, Connecticut. ``We will probably test the bottom end of the range before long because of the poor economic news.''

Brent crude oil for December settlement increased $2.23, or 3.7 percent, to $62.71 a barrel on London's ICE Futures Europe exchange.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.