Oil prices higher on weaker $US

AAP

ENERGY

Oil prices moved higher on Tuesday as a weaker dollar put some traders in a buying mood as they awaited details on the Federal Reserve's plan to boost the US economy.

Benchmark crude for December delivery rose 95 cents to settle at $US83.90 a barrel on the New York Mercantile Exchange.

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It was the third straight day of gains for oil, driven primarily by a weaker dollar and expectations that the Federal Reserve will buy government bonds to stimulate the economy. An announcement is expected Wednesday after the Fed concludes a two-day meeting.

That, in turn, could weaken the dollar, depending on the amount of money the policymakers decide to put into the economy and the timeframe in which the buying would occur. Since commodities like oil and gold are priced in dollars, a weaker dollar makes them more attractive to buyers who use foreign currencies.

In addition, oil may be benefiting from comments by Saudi Arabian Oil Minister Ali Naimi, who said he would be comfortable with oil prices in a range between $US70 a barrel and $US90 a barrel, according to energy consultancy Cameron Hanover.

In other Nymex trading in December contracts, heating oil added 1.59 cents to settle at $US2.2936 a gallon, gasoline gained 1.67 cents to settle at $US2.1096 a gallon and natural gas rose 3.8 cents to settle at $US3.870 per 1,000 cubic feet.

In London, Brent crude rose 79 cents to settle at $US85.41 a barrel on the ICE Futures exchange.

PRECIOUS METALS

Benchmark December gold futures rose $US6.30 to settle at $US1,356.90 on the Comex division of the NY Mercantile Exchange. December silver rose 28.4 US cents to settle at $US24.836, but December palladium fell $US3.25 to $US645.45.

January platinum rose $US7.60 to $US1,719.10.

BASE METALS

Copper rose on Tuesday as the dollar fell and on signs demand could be improving in top metals consumer China as well as in Europe, while focus shifted to US elections and a Federal Reserve meeting.

Three-month copper on the London Metal Exchange closed at $8,435 a tonne, up from a close of $8,300 on Monday.

The metal used in power and construction closed up over 1.5 per cent, but remains below last month's highs of $8,554, which was the highest since July, 2008. Aluminium also finished up over 2 per cent, nearing the highest level since late April.

A weaker dollar attracted non-US investors and gave metals a lift.

Supporting the demand outlook for metals, a survey on Tuesday showed euro zone manufacturers boosted output in October at a faster pace than previously estimated.

Aluminium ended at $2,430 a tonne from $2,372. It is closing in on its five-month peaks from mid-October at $2,459.

Zinc was at $2,453 a tonne from $2,449. Stocks of zinc at LME warehouses rose by 4,225 tonnes to 632,225 tonnes, the highest since January 2005, LME data showed.

Over the past week, 26,500 tonnes have been registered in New Orleans warehouses, a jump of almost 10 per cent in that location.

"(New Orleans) had been relatively quiet since the large draws seen in early August, with the inflows perhaps reflecting that material being put back on warrant once again," added Standard Bank's Westgate.

Battery material lead was at $2,485 a tonne from $2,465 a tonne. LME lead inventories jumped 2,725 tonnes to their highest in more than ten years, above 200,000.

Tin closed at $25,800 a tonne from $25,600 a tonne and nickel finished at $23,475 a tonne from $23,245.

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