* Oil prices rise as investors hedge against weaker dollar
* Producers deny report they'd stop pricing oil in dollars
* U.S. EIA raises forecast for 2010 world oil demand
(Recasts and updates with settlement prices.)
By Joshua Schneyer
NEW YORK, Oct 6 (Reuters) - Oil prices rose on Tuesday as
investors bought commodities to hedge against a weaker dollar
and the U.S. government forecast an increase in world oil
demand.
The U.S. Energy Information Administration raised its
outlook for world oil demand during the fourth quarter and for
2010, on expectations of economic recovery in Asia.
EIA raised its global oil demand estimate by 170,000
barrels a day for the fourth quarter and said it expected
consumption to rise by 1.1 million bpd next year, versus
earlier expectations of a 910,00 bpd rise. []
U.S. crude <CLc1> rose 47 cents to settle at $70.88 a
barrel, after touching a two-week high of $71.97 earlier. In
London, Brent crude <LCOc1> settled up 52 cents at $68.56.
Slumping demand due to the economic crisis has helped push
crude prices off record highs near $150 a barrel struck in July
2008.
U.S. retail gasoline demand last week jumped 7 percent from
the same period last year and rose 0.6 percent from the
previous week, according to a MasterCard SpendingPulse report
released on Tuesday. []
WEAKER DOLLAR
Further support came as the U.S. dollar dropped after
Australia's Central Bank unexpectedly raised interest rates, a
move investors took as a signal world economies may recover
soon, potentially boosting fuel demand. <.DXY>
The dollar also weakened after Britain's Independent
newspaper reported that major oil exporters were in secret
talks to abandon the greenback as the currency they use to
price oil, citing anonymous sources. Major oil producers,
including top exporters Saudi Arabia and Russia, immediately
denied the report, however. []
Oil and other commodities denominated in dollars for global
trading tend to rise when the U.S. currency falls as they
become cheaper for holders of other currencies. A move away
from dollar-based pricing of the world's leading commodity
could further weaken the greenback. <.DXY> []
Iran, OPEC's No. 2 producer, moved away from pricing oil in
dollars this year. [] []
"Iran's success at moving to a euro basis for its oil sales
... sparked reports about a possible broader shift away from
dollar-based pricing," said Tim Evans, energy analyst at Citi
Futures Perspective in New York.
"But it looks as though other major oil exporters are
sticking with the U.S. dollar, at least for now."
Stock markets also rose Tuesday, supporting prices further.
[]
"It's all about the dollar for commodities, and it's all
about the dollar for equities," said Chris Jarvis, senior
analyst at Caprock Risk Management in New Hampshire.
Optimism that fuel demand will recover is helping boost oil
prices, but most analysts still expected data to show that U.S.
crude oil inventories rose last week.
EIA data will likely show that U.S. crude stocks grew by
2.2 million barrels in the week to Oct. 2, as refinery
utilization and feedstock usage dipped on poor refining
margins, according to the average estimate of 14 analysts
polled by Reuters. []
"Weak demand data is stopping prices rallying and maybe
fund support is stopping it sinking," said Christopher Bellew,
an oil broker at Bache Commodities in London.
The American Petroleum Institute was to release its
inventory report on Tuesday at 4:30 p.m. (2030 GMT), while the
EIA will publish its supply data on Wednesday.
(Additional reporting Gene Ramos in New York and Christopher
Johnson and Joe Brock in London; Editing by Walter Bagley)
