Crude Oil Ends Higher On Weak Dollar, Fed Policy Meet

(RTTNews) - U.S. crude oil ended higher on Monday, even as investors awaited the outcome from the U.S. Federal Reserve policy review meet beginning Tuesday, anticipating a cut to its $85 billion monthly bond-buying program. The possibility of excess supply eased after with the scheduled reopening three Libyan ports last week was put on hold under pressure from rebels, with news reports that it may not become operational for a considerable period of time.

Investors also weighed some largely positive economic data out of the U.S. and Europe, with a weak dollar further supporting oil prices. A weak dollar makes dollar-denominated commodities more attractive to buyers holding international currencies.

Light Sweet Crude Oil futures for January delivery, the most actively traded contract, gained $0.88 or 0.9 percent to close at $97.48 a barrel on the New York Mercantile Exchange Monday.

Crude prices for January delivery scaled a high of $97.69 a barrel intraday and a low of $96.21.

Last week, oil shed over 1 percent after a significant, more-than-expected jump in U.S. gasoline stockpile, notwithstanding a massive drop in crude oil inventories. News reports that Libya may reopen three of its oil shipping ports during the weekend also suggested ample supplies with increased shipments from the North African country.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.07 on Monday, down from 80.18 late Friday in North American trade. The dollar scaled a high of 80.22 intraday and a low of 79.92.

The euro traded higher against the dollar at $1.3765 on Monday, as compared to its previous close of $1.3729 late Friday in North America. The euro scaled a high of $1.3798 intraday and a low of $1.3730.

In economic news from the U.S, a Federal Reserve report on Monday showed U.S. industrial production rose much more than expected in November, with utilities output jumping sharply amid colder-than-average temperatures. Industrial production surged 1.1 percent in November, much better than the 0.6 percent increase projected by economists. The Fed said the data for October was upwardly revised to show a 0.1 percent uptick compared to the originally reported 0.1 percent drop.

A Federal Reserve Bank of New York report on Monday showed its index of regional manufacturing activity bounced back into positive territory in December, with its general business conditions index climbing to a positive 1.0 in December from a negative 2.2 in November. Economists expected the index to climb to 4.5.

Meanwhile, a Labor Department report on Monday showed a notable upward revision to the pace of U.S. labor productivity growth in the third quarter of 2013, with output increasing much more than previously estimated. Labor productivity increased 3.0 percent in the third quarter compared to the initial estimate of 1.9 percent growth. Economists expected the pace of growth to be upwardly revised to 2.8 percent. The upward revision to the increase in productivity, a measure of output per hour, reflected stronger than previously reported output growth.

China's factory sector activity slowed in December as output growth weakened and employment contracted further, preliminary results of a survey published by Markit Economics revealed Monday. The headline HSBC purchasing managers' index dropped to a three-month low of 50.5 in December from 50.8 in November. However, the above-50 reading indicates expansion of the sector.

From the eurozone, Germany's manufacturing purchasing managers' index increased in December to its highest level in thirty months, indicating a significantly faster growth in activity, data from a survey by Markit Economics and BME showed. The seasonally adjusted manufacturing purchasing managers' index climbed to 54.2 in December from 52.7 in November. Economists anticipated a reading of 52.9.

Meanwhile, activity in the eurozone private sector increased at a faster pace in December, better than what economists expected, data from a recent survey revealed. The seasonally adjusted composite output index, which gauges the performance of the manufacturing sector and the service sector, advanced to 52.1 in December from 51.7 in November, a survey conducted by Markit Economics showed. Economists expected a reading of 51.9.

A report from the Eurostat revealed trade surplus in the eurozone rose to EUR 17.2 billion in October from EUR 9.6 billion in October last year. In September, the surplus amounted to EUR 10.9 billion.

The major focus for the week will be the two-day Federal Open Market Committee meet due to end on Wednesday and the ensuing press conference by the Fed Chairman. Also in focus will be the weekly crude oil inventories data from the American Petroleum Institute due Tuesday after the market hours and the official Energy Information Administration's report on Wednesday.