Oil rises above $79

Oil rose nearly 2 percent to above $79 a barrel on Tuesday after data showed US factory orders in September expanded at a quicker pace than expected, signalling potential for more fuel demand in the world's biggest energy consumer. Factory orders rose 0.9 percent in September, surpassing Wall Street analyst expectations, and factory inventories fell.
"Factory orders are a positive sign. This helps the broad sentiment that an economic recovery will eventually boost fuel demand and send prices higher," said Gene McGillian of Tradition Energy in Stamford, Connecticut. Crude oil rose along with gold, which reached a record above $1,084 an ounce. India's Central Bank bought 200 tonnes of gold from the International Monetary Fund on Monday, in a sale signalling more commodities demand and reassuring investors the IMF was unlikely to sell large volumes of gold on the open market.
"Some people are viewing the rally in gold as a reason to push crude up," said Tim Evans, energy analyst at Citi Futures Perspective in New York. US crude for December rose $1.47 a barrel to settle at $79.60. London Brent crude futures rose $1.56 to settle at $77.81 a barrel. US retail gasoline demand last week rose 3.3 percent from a year ago , according to a MasterCard SpendingPulse report. Demand was down 0.4 percent from the previous week, according to the weekly report.
Oil traders were awaiting weekly US oil inventory data. Analysts expect that US crude inventories rose by 1.4 million barrels last week, but stocks of distillates like heating oil and diesel were expected to fall by 1 million barrels, according to the latest Reuters poll. Inventory data is due from industry group American Petroleum Institute late Tuesday, followed by weekly data from the US Department of Energy on Wednesday.
Opec member Venezuela said it saw no need for the producer group, which pumps a third of the world's oil, to raise crude output when its ministers meet in December. Some Opec members have said Opec should produce more crude if global crude stocks fall and prices rise further. "We do not share the position of increasing output. We still notice a lot of instability in the oil market," Venezuelan Energy Minister Rafael Ramirez told reporters at a conference.
Crude prices had fallen sharply earlier in the day as the US dollar firmed to a one-month high against other currencies and equities markets declined. A firming dollar and falling stock prices are typically signs of investors shunning riskier assets, including commodities.
"It seems as if today (oil prices) have taken the lead and detached from being the follower of equity markets and the dollar," McGillian said. US crude futures rose to their highest level this year at $82 per barrel in late October, when the dollar weakened to a 14-month low.