Oil climbs toward $95 on US dollar concerns

Oil extended gains on Monday, nearing $95 a barrel as the dollar fell and some Opec members pushed for action to stem their declining purchasing power. US light crude for January delivery the new front month contract, rose 71 cents to $94.55 a barrel, adding to Friday's nearly 2 percent gains that were partly fuelled by forecasts for colder US weather that would boost demand.
London Brent crude rose 67 cents to $92.29 a barrel. The Opec heads of state summit in Riyadh ended on Sunday without signalling whether the producer group would agree to pump more oil at its December 5 policy meeting, although members renewed their pledge to provide "adequate" supplies to consumers.
Of greater interest to oil traders was the push by Iran and Venezuela anti-US firebrands and typically Opec's most hawkish members to press for some kind of action that would offset the declining value of their dollar-denominated oil revenues, such as pricing oil against a basket of currencies.
Iran's president Mahmoud Ahmadinejad was quoted as saying that the market price of fossil energy, including oil, was still below its real price. While the weak dollar was omitted from the summit's final statement, traders say the growing concern over the US currency's predicament could prompt Opec to seek a higher price.
"Opec talk about prices being undervalued and its concerns with the falling dollar are all filtering into the market," said Mark Pervan, a senior resources analyst at ANZ Bank in Melbourne. "There are pockets of bullish news out in the market and no bearish news at all."
The dollar fell again versus the euro on Monday after weak US economic reports late last week that showed the biggest drop in industrial production since January. Oil slipped from an all-time high of $98.62 a barrel struck on November 7 as traders fretted about weakening oil demand in the world's top consumer and US crude stocks unexpectedly rose, although the approach of winter weather has lent fresh support.
Separately, Venezuelan President Hugo Chavez told the Opec summit that crude oil prices could double to $200 a barrel if the United States attacked major oil exporter Iran. But Iran's President Ahmadinejad said on Sunday his country would not use oil as a weapon even if the US attacks it over Tehran's disputed nuclear programme.