Oil edges higher on Saudi remarks
Singapore, November 2, 2010
Oil prices went up slightly on Tuesday, with investors cautious ahead of expected monetary easing from the US Federal Reserve, capping gains from Saudi Arabia's upward shift in price tolerance.
US crude for December rose 12 cents to $83.07 a barrel at 0258 GMT, while ICE Brent nudged two cents higher to $84.64.
The market was expected to trade in a tight range until Wednesday's decision by the US Federal Reserve, which analysts widely believe will be to pump more money into the world's biggest economy and which could spur more dollar weakness.
The Fed's pending announcement overshadowed comments from Saudi's Oil Minister Ali al-Naimi on Monday that consumers would be comfortable with oil prices rising as high as $90 a barrel.
'(Naimi's) comments in a normal market would probably shift things, but in this sort of environment investors are looking at the bigger picture. The market is focused on the US dollar at the moment,' said David Taylor, an analyst at CMC Markets in Sydney.
All eyes on the dollar
The dollar held on to overnight gains after data on Monday showed surprisingly strong growth last month in the US manufacturing sector, but the numbers probably came too late to stop the Fed from more monetary easing.
For much of this year, international benchmark US crude had largely stuck to the $70-$80 range but has broken above the top of that bracket in the past month, led higher by the weak dollar, which makes dollar-denominated commodities relatively cheap.
Naimi's comment was interpreted by brokers and analysts as signaling the world's top oil exporter could allow prices to climb to $90, above the $70-$80 range the Kingdom had previously deemed satisfactory.
Industry group the American Petroleum Institute will issue its latest US crude oil inventory data later on Tuesday.
Analysts expect stockpiles in the world's largest energy consumer to have risen for the fourth time in five weeks last week as imports increased. – Reuters