* Fed to buy $600 bln in treasuries until mid-2011
* Dollar slides versus euro, basket of currencies
* Technicals show price target of $87/bbl
* U.S. jobless claims rise more than expected
* Coming Up: US Oct nonfarm payrolls, unemployment on Fri
(Updates with settlement prices, market activity)
By Gene Ramos
NEW YORK, Nov 4 (Reuters) - Oil leaped to its highest level
in seven months on Thursday, gaining 2 percent and rising for
the fourth day in a row as the the U.S. Federal Reserve's new
monetary stimulus plan to aid the flagging economy spurred
investors' risk appetite.
U.S. crude for December delivery <CLc1> settled up $1.80 at
$86.49 a barrel, the highest close for front-month crude since
April 6. It has gained $5.06, or 6.2 percent, so far this week,
the steepest rise for a four-day period since Oct. 5.
ICE December Brent <LCOc1> ended up $1.62, or 1.9 percent,
at $88, the highest close for front-month Brent since May 3.
The dollar slumped to a 28-year low against the Australian
currency and a more than nine-month trough versus the euro a
day after the Fed's decision to buy $600 billion in U.S.
Treasury bonds, as investors sought better returns elsewhere.
[]
A weak dollar lifts oil and other dollar-denominated
commodities as it lowers the value of the currency paid to oil
producers and it attracts investments seeking higher gains than
those found in other markets.
The dollar fell further as data showed that first-time
filings by Americans for jobless benefits rose more than
expected last week, reflecting a weak labor market.
[]
"The Fed stimulus will continue to draw investors/traders
to oil as well as most other raw materials in response to the
weak dollar and fears of inflation starting to materialize down
the road," said Dominick Chirichella, senior partner at Energy
Management Institute in New York
U.S. front-month crude oil has gained 15 percent since Aug.
27, when Fed Chairman Ben Bernanke signaled that plans were
afoot for another round of quantitative easing. Correlating
inversely, the dollar's value against a basket of currencies
<.DXY> has fallen 6.5 percent in that period.
Technical indicators point to a bullish target of $87.04,
with support at $84, according to Reuters analyst Wang Tao.
[]
As the dollar fell, the Reuters-Jefferies CRB index <.CRB>,
a global commodities benchmark, rose to its highest level since
October 2008 and Wall Street gained as investors cheered the
Fed action to help the faltering economy. []
HIGHER PRICE RANGE
Wide anticipation of the Fed's fresh stimulus in October
drove oil prices out of the previous $70-$80 a barrel range.
Top oil exporter Saudi Arabia earlier this week shifted its
price range up to $70-$90 but on Thursday, a senior Gulf source
said prices between $70-$80 is still a fair price.
Oil at $90 would not hold back growth in the world economy,
OPEC Secretary General Abdullah al-Badri said. The comments
added to indications this week that the Organization of the
Petroleum Exporting Countries was unlikely to step in to quell
rising prices.
"It's the dollar, a function of QE2, and some post-election
euphoria and the OPEC green light to $90," said Robert Yawger,
senior vice president, energy futures at MF Global in New York.
Many analysts said fluctuations in the dollar will remain
the principal driver in the oil market, although some have
warned of long-term dangers of QE2 for Asian demand growth.
"We have trouble seeing how much longer the current run can
extend to, given that at some point, higher commodity prices
will lead to even higher inflation and interest rates in
emerging countries," said Edward Meir, analyst at MF Global,
adding that the dollar was currently the "sole driver."
Oil prices remain supported by Wednesday's U.S. government
data showing larger-than-expected drawdowns last week in
distillate and gasoline stocks, even though crude inventories
rose more than forecast.
(Additional reporting by Robert Gibbons in New York, Emma
Farge in London; Alejandro Barbajosa in Singapore; Editing by
Marguerita Choy)
