Crude oil rose for the first time in three days as the dollar fell against the euro, bolstering the appeal of energy and metals as an alternative investment.
Oil advanced more than 3 per cent as rising stock prices reduced the need for holding the US currency as a refuge. The US Energy Department will probably report tomorrow that refiners boosted operating rates to meet summer gasoline demand, according to a Bloomberg News survey.
"This is a financial-driven market not a fundamental- driven market," said Michael Lynch, president of Strategic Energy & Economic Research, in Winchester, Massachusetts. "It’s hard to see a lot of rational reasons for this rally. The flow of investors, not consumers, that’s what’s supporting the oil and commodity markets."
Crude oil for July delivery gained $US1.88, or 2.8 per cent, to $US69.97 a barrel at the close of floor trading on the New York Mercantile Exchange. Futures advanced as much as $US2.09, or 3.1 per cent, today. Prices have risen 57 per cent this year and touched a seven-month high of $US70.32 on June 5.
The dollar fell in the past three months against all of the 16 most-traded currencies tracked by Bloomberg except the yen on speculation the Fed’s purchase of up to $US300 billion in Treasuries to support the economy will undermine the US currency. The dollar declined 1 per cent to $US1.4032 against the euro, from $US1.39 yesterday.
Most US stocks advanced as a rally in technology shares triggered by a better-than-estimated forecast at Texas Instruments. The Standard & Poor’s 500 Index, which has rallied 40 per cent from a 12-year low in March, added 0.5 per cent to 944.05.
