Light oil price trading around $81 boosted by weaker US dollar

A falling US dollar helped the US light oil price stay above $80 a barrel in trading Monday as oil traders looked to company earnings and US economic data for evidence that justifies last week’s jump to a 2009 high.

By midday in Europe, benchmark crude for December delivery was down 5 cents to $80.45 a barrel in electronic trading on the NYMEX. Earlier in the day, it fell as low as $79.57. The contract fell 69 cents a barrel to settle at $80.50 on Friday.

Light crude oil prices, which rose to $82 last week, fell for a third day on investor doubts about the strength of the global economic recovery and as the dollar strengthened. Because commodities are priced in dollars, a drop in the U.S. currency makes them cheaper to international investors.

“If the oil price continues to rise in the next week or two, there is a danger that economic recovery will be strangled at birth and these fears will give rise to talk that OPEC must act to put more oil into the market to cap prices,” said a report from Britain’s KBC Market Services. “Today’s $80 (per barrel) price is not firmly grounded because the fundamentals for both the economy and the oil market remain weak.”

Oil traders will be looking to a slew of corporate results and economic indicators for guidance this week. The Commerce Department is scheduled to announce third-quarter gross domestic product, with reports on housing prices, new home sales, consumer confidence and durable goods orders also due during the week.

Tags:  light oil price, trading, US dollar