Oil rises as US dollar dip bolsters investor demand for commodities

[NEW YORK] Oil advanced as the US dollar's decline against its peers increased investor appetite for commodities.

Futures rose 0.6 per cent in New York. The greenback fell as investors largely ruled out a Federal Reserve hike in September. Futures retreated from the day's high as a tanker returned to Libya's Ras Lanuf export terminal to load oil after clashes halted what will be the first overseas crude shipment from the terminal since 2014.

Opec may call an extraordinary meeting if ministers reach consensus at informal talks next week, secretary general Mohammed Barkindo said, according to the Algerian Press Service.

"The market's moving on trepidation about the upcoming Fed meeting, which has had a big impact on the US dollar," said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. "There's also a lot of sorting out of the Opec comments. There are some people who pay inordinate attention to them."

Oil has fluctuated since rallying in August on speculation the Organization of Petroleum Exporting Countries and Russia will agree on measures to stabilise the market at the meeting next week in Algiers. Prices tumbled 6.2 per cent last week amid concern the resumption of shipments from Libya, as well as Nigeria, would worsen a global glut.

West Texas Intermediate for October delivery, which expires Tuesday, climbed 27 US cents to close at US$43.30 a barrel on the New York Mercantile Exchange. The more-active November contract rose 24 US cents to US$43.86. Total volume traded was 15 per cent below the 100-day average.

Brent for November settlement advanced 18 US cents, or 0.4 per cent, to US$45.95 a barrel on the London-based ICE Futures Europe exchange. The global benchmark closed at a US$2.09 premium to WTI for November delivery.

The US dollar declined from a seven-week high as investors braced for the Fed policy decision on Wednesday while Goldman Sachs Asset Management said the greenback's rally is set to fizzle. A falling US dollar makes raw materials priced in the currency more attractive to investors.

The tanker Seadelta returned to Libya's third-biggest oil port to resume loading 781,000 barrels of oil for shipment to Italy, Nasser Delaab, an inspector at Harouge Oil Operations, said Monday by phone. Another vessel, the Syra, would arrive in Ras Lanuf later on Monday to ship 600,000 barrels of crude to Italy, he said.

The Seadelta had halted loading after fighting on Sunday between local Petroleum Facilities Guard units and forces loyal to eastern-based military commander Khalifa Haftar.

Next week's Opec gathering will be a "meeting of consultation and not of decision-making," unlike the group's meeting in Oran, Algeria, in 2008, when it agreed to cut production, Mr Barkindo said Saturday, according to Algeria's official news agency.

Opec members are close to reaching an agreement on how to stabilise the market, Venezuelan President Nicolas Maduro said Sunday at a press conference after speaking to his counterparts from Iran and Ecuador. Mr Maduro said he hopes an accord can be reached by the end of the month.

Saudi Arabia oil refinery output rose to 2.91 million barrels a day in July, according to the JODI-Oil World Database.

The biggest exchange-traded fund that tracks oil prices attracted its largest investment in six weeks as oil fell to a one-month low.

US explorers added two oil drilling rigs last week, bringing the total to the highest since February, Baker Hughes Inc data showed Friday.

Money managers cut wagers on both falling and rising WTI crude prices during the week ended Sept 13, according to the Commodity Futures Trading Commission.

Hedge funds increased their bullish stance in Brent crude in the week to Sept 13, raising net-long positions by 8,912 contracts to 359,173, according to data from ICE Futures Europe.

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