* Tropical Storm Ida shuts in Gulf of Mexico oil output
* Dollar under pressure, equities rise
* Saudi Arabia lifts Dec oil supply to global oil firms
(Adds Ida details, updates prices at settlement)
By Edward McAllister
NEW YORK, Nov 9 (Reuters) - Oil rose more than 2 percent on
Monday after Tropical Storm Ida forced the shut in of 30 percent of
oil production in the Gulf of Mexico, cutting supplies to the
world's largest energy consumer.
U.S. crude for December delivery <CLc1> rose $2 to settle at
$79.43 a barrel. London Brent crude <LCOc1> settled up $1.90 at
$77.77.
Ida, the first real storm threat of the 2009 season, was
downgraded from a hurricane on Monday, but production remained
curtailed as producers waited for the storm to pass over the Gulf.
Ida shut in 29.6 percent of oil production and 27.5 percent of
gas output from the Gulf of Mexico, the U.S. Minerals Management
Service said Monday. []
"Crude is up on the weak dollar and the impact of Tropical Storm
Ida, overshadowing some bearish news of the Saudis raising supplies
available and China raising fuel prices," said Phil Flynn, analyst
at PFGBest Research in Chicago.
Crude has been bolstered by stronger equities and a weaker
dollar in recent months, as investors look to wider macro economic
data for a hint of economic recovery and a rebound in energy
demand.
U.S. stocks jumped, extending last week's gains, on renewed
risk-taking sentiment after the Group of 20 pledged to keep economic
stimulus in place until a recovery was assured. []
The news also sent the dollar down across the board, helping
bolster crude prices. [] A weak dollar makes dollar-denominated
commodities like crude cheaper for holders of other currencies and
helps support prices.
"I think it's more buy on the rumour, sell on the fact. It does
not seem as if (Ida is) strong enough to create structural damage,"
said Olivier Jakob of Petromatrix.
"Nothing fundamental has really changed, but you buy because of
the dollar and equities."
Oil prices have rallied from a low of below $33 a barrel last
December, in line with a rally sustained for much of the year on
equities.
PRICES VULNERABLE
For oil prices, the market's failure to sustain the strength
that took it to a year-high of $82 a barrel in October was seen as
bearish, and speculators have begun to unwind long positions.
The latest data from the Commodity Futures Trading Commission on
Friday showed money managers had reduced their net long crude
positions on the New York Mercantile Exchange. Speculative length is
still historically high and analysts said further selling was
likely.
Fuel inventories are brimming, with U.S. distillate stocks,
which include heating oil and diesel, at their highest levels in
more than a quarter of a century.
Potentially adding to the oil surplus, Saudi Arabia, the world's
top oil exporter, has increased December supplies to large
companies, and one Asian customer is expected to receive full
contract volume.
For most, however, deep output cuts were still being enforced
and supplies to many were around steady.
Some in the Organization of the Petroleum Exporting Countries
have raised the possibility of an increase in production when the
group meets in December, but only if oil prices continue to rise and
economic recovery is maintained.
United Arab Emirates Oil Minister Mohammed al-Hamli said at the
weekend that raising oil production was not on the agenda for the
producer group.
(For a graphic on the path of Hurricane Ida click on:
http://graphics.thomsonreuters.com/119/US_HKIDA1109.gif)
(Additional reporting by Matthew Robinson and Robert Gibbons in New
York, Barbara Lewis and Joe Brock in London; editing by Marguerita
Choy)
