Oil Prices Edge Higher

LONDON : Oil prices rose slightly on Tuesday as traders paused for breath after sharp falls the previous day and kept an eye on a strengthening dollar.

New York’s main contract, light sweet crude for delivery in December, added nine cents to 78.77 dollars a barrel.

Brent North Sea crude for December rose 12 cents to 77.38 dollars in early London deals.

Crude oil fell sharply on Monday as the dollar rose and on expectations of easing violence in Nigeria, whose crude production has been ravaged by militant attacks.

The New York contract 1.82 dollars and London Brent tumbled 1.66 dollars on Monday.

In recent days, oil prices have slid on profit-taking after New York crude struck 82 dollars last week, its highest level since October 14, 2008, on the back of the slumping US currency.

“The weakness of the US dollar has played an increasing part in the rise in commodity prices,” Capital Economics analysts said in a report.

“A partial recovery in the dollar is therefore one important downside risk,” they added.

The dollar hit a five-week high against the yen on Tuesday amid mounting speculation that the US Federal Reserve may signal a clearer timeframe for lifting its rock-bottom interest rates.

The weekend announcement of an “indefinite ceasefire” by militants in Nigeria partly allayed investor concerns over potential supply disruptions in the African country. Nigeria is the world’s eighth-largest oil producer.

The Movement for the Emancipation of the Niger Delta (MEND) said it made its decision after the government “expressed its readiness to engage in serious and meaningful dialogue with every group or individual towards achieving a lasting peace in the Niger Delta.”

MEND’s attacks on the Nigerian oil industry have played havoc with oil prices and slashed the nation’s output by a third since 2006.

Global Stocks Edge Higher; China Report Hits Dollar

LONDON: A Chinese report saying Beijing should increase its holdings of euros and yen in its foreign reserves knocked the already battered dollar on Monday while global stocks sought to recover from last week’s weakness.

Euro zone government bonds hit a one-month low.

The dollar fell to a 14-month low against the euro and the yen got a boost from an opinion piece in the Financial News, a paper published by the People’s Bank of China.

It said the dollar should remain the principal currency in China’s foreign exchange reserves but that the share of euros and yen should increase.

The issue of countries diversifying their reserves or even ditching the dollar has been one of the factors weakening the U.S. currency this year.

This was underlined by the general weakness that continued even after the author of the report said he was expressing a personal opinion.

The dollar has lost more than 7 percent against a basket of major currencies so far this year (.DXY).

“The comments from China are pretty strong and that is supporting the euro,” said Tony Bieber, forex analyst at Suncorp.

The euro rose as high as $1.5064 on trading platform EBS, its highest since August 2008, pushing up from below $1.50 in early trade. It was later up 0.2 percent at $1.5030.

The dollar was down 0.2 percent at 91.80 yen.

STOCKS FIRMER

World equities as measured by MSCI (.MIWD00000PUS) edged upwards as did the main emerging market index (.MSCIEF) after some weakness last week.

There were some signs last week that investors may be becoming more jittery about taking on risk than they have been lately, or at least keener to book profits.

Emerging market stocks, for example, fell for four days in a row.

On Monday, European shares were higher in early trade. The pan-European FTSEurofirst 300 (.FTEU3) index of top shares was up 0.1 percent.

Earlier, Japan’s Nikkei average (.N225) hit its highest close in four weeks.

Euro zone government bonds edged lower, tracking U.S. Treasuries down as that market braced for a record wave of issuance this week.

December Bund futures were near one-months and 10-year bond yields were at one-month highs around 3.371 percent.

The U.S. government will offer a record $123 billion in longer-dated debt this week, beating the previous record of $115 billion set in July.