Oil Jumps $2 on Winter Supply Concerns
Oil rose $2 to over $81 per barrel Tuesday, on concerns about consumer-nation supplies ahead of the coming Northern Hemisphere winter.
European oil product inventories fell in September, industry monitor Euroilstock reported, while the U.S. government said heating demand will be higher this year than last due to forecasts for cooler weather.
The reports helped push U.S. light, sweet crude futures up $2.04 to $81.06 per barrel by midafternoon Tuesday, reversing Monday's big sell-off. Prices settled down to $80.51, up $1.49.
London Brent crude gained $1.18 to $77.76.
European distillate stocks in September fell 5.25 million barrels, or 1.3 percent, from August, while gasoline stocks fell 6.80 million barrels, or 5.2 percent, from a year earlier, according to Euroilstock.
The U.S. Energy Information Administration said consumers in the world's top energy market will pay 10 percent more to warm their homes this winter than last year due to cooler weather.
"This morning's EIA report was taken as supportive for prices on the expectations for increased demand," said Eric Wittenauer, analyst at A.G. Edwards.
Adding support to commodities, the dollar fell against the euro Tuesday after a two-day rally.
"It's also being supported by the dollar, which is giving back some of the gains it has had over recent days. That's also supporting commodities across the board, industrial metals and gold are up," Wittenauer added.
Some investors had bought crude and commodities in recent weeks as a hedge against the weaker dollar, which reached multi-year lows against other major currencies following a cut in U.S. interest rates last month.
Support also came after Turkey's prime minister gave the green light Tuesday for possible military action in northern Iraq to attack Kurdish rebels in the OPEC country.
Analysts were also looking for direction from U.S. weekly government inventory data, which experts forecast would show a 600,000-barrel build in crude stocks, a 600,000-barrel distillate draw and a 100,000-barrel fall in gasoline inventories when it is released Thursday.