Crude Oil Trades Above $79 on China’s Imports, Weaker Dollar

By Ben Sharples and Christian Schmollinger

Nov. 12 (Bloomberg) -- Crude oil traded above $79 a barrel in New York as China’s rising oil imports and a weaker dollar spurred investors to buy commodities.

Oil gained as much as 0.5 percent as the dollar approached a two-week low against the euro, weakening against 13 of 16 major counterparts. Gold reached a record. Net crude imports to China, the largest oil user after the U.S., climbed in October to the second-highest level ever.

“It’s a market that is just really waiting to move higher,” Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney, said in a Bloomberg Television interview. If oil can break through $80 “then there are enough positive fundamentals that could see it trade upwards and onwards through to $85,” he said.

Crude oil for December delivery traded at $79.25, down 3 cents, in electronic trading on the New York Mercantile Exchange at 3:51 p.m. Singapore time. Yesterday, the contract climbed 23 cents to settle at $79.28 a barrel. Prices have gained 78 percent this year.

Oil rose as much as 1.3 percent yesterday as China’s industrial output expanded last month, signaling a strengthening recovery. Net oil imports were 18.98 million tons, or 4.5 million barrels a day, the Beijing-based customs office said.

The dollar was at $1.4975 per euro at 4:52 p.m. in Tokyo from $1.4987 yesterday, when it touched $1.5048, the lowest level since Oct. 26. A weaker dollar increases the appeal of commodities as an alternative investment.

“If the U.S. dollar continues to weaken that’ll certainly help commodities, in particular oil,” Barratt said.

China Buying

China’s net imports in October were the highest since July’s record 19.2 million barrels. China and the U.S. are responsible for 33 percent of global oil consumption, according to BP Plc.

Crude-oil processing volume in China climbed to a record 33.3 million metric tons, or 7.8 million barrels a day, in October, according to China Mainland Marketing Research Co., which compiles data for the government. That was 10 percent higher than a year ago.

The U.S. Energy Department will publish its weekly inventory report today. Crude-oil stockpiles probably rose 1 million barrels last week as imports increased, according to the median of 16 responses from analysts surveyed by Bloomberg News.

A Nov. 10 report from the American Petroleum Institute showed crude oil supplies rose 1.22 million barrels last week to 337.5 million.

The Energy Department report will probably show that gasoline supplies declined 350,000 barrels, according to the survey. Stockpiles of distillate fuel, a category that includes heating oil and diesel, may have fallen 700,000 barrels.

The Standard & Poor’s 500 Index increased 0.5 percent to 1,098.51 in New York yesterday, its highest close since Oct. 3, 2008. The Dow Jones Industrial Average added 0.4 percent to 10,291.26.

Brent crude for December settlement was at $77.99 a barrel, up 4 cents, on the London-based ICE Futures Europe exchange at 3:51 p.m. Singapore time. The contract advanced 45 cents, or 0.6 percent, to end the session at $77.95 a barrel yesterday.

To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Christian Schmollinger in Singapore at christian.s@bloomberg.net