Crude oil rose as the dollar dropped to a five-month low against the euro, bolstering the appeal of commodities as an alternative investment.
Oil climbed as much as 1.6 percent after the greenback slipped against the common currency on a report showing that German business confidence unexpectedly increased to a three- year high in September. Futures extended gains after a U.S. report showed orders for capital equipment rebounded in August.
“Dollar weakness is propelling all of the commodity markets,” said Bill O'Grady, chief market strategist at Confluence Investment Management in St. Louis. “Commodities aren’t being purchased for end usage, but as a store of value.”
Crude oil for November delivery increased $1.14, or 1.5 percent, to $76.32 a barrel at 10:47 a.m. on the New York Mercantile Exchange. The November contract has risen 1.9 percent this week.
Brent crude oil for November settlement gained 97 cents, or 1.2 percent, to $79.08 a barrel on the London-based ICE Futures Europe exchange.
The dollar declined to $1.3462 per euro, down 1.1 percent from $1.3314 yesterday. The U.S. currency touched $1.3477 against the euro, the lowest level since April 20.
The greenback’s fall helped send gold to a record and silver to a 30-year high. The Reuters/Jefferies CRB Index of 19 commodities advanced 0.9 percent to 282.60, the highest level since Jan. 19.
“Gold, silver and platinum are all surging and the grains and livestock have been strong,” O’Grady said. “Energy has been the laggard in the commodity index. At some point before long we’re going to see it catch up with the metals and agricultural products.”
The Munich-based Ifo institute said its business climate index, based on a survey of 7,000 executives, increased to 106.8 from 106.7 in August. That’s the highest level since June 2007. Economists had expected a drop to 106.4, according to the median of 36 forecasts in Bloomberg News survey.
Bookings for U.S. goods like computers and communications gear rose 4.1 percent after a 5.3 percent decline in July that was smaller than previously estimated, figures from the Commerce Department showed today in Washington. Total orders fell 1.3 percent, depressed by volatile demand for aircraft. Orders excluding transportation equipment rose more than forecast.
The Standard & Poor’s 500 Index gained 1.7 percent to 1,145.94, and the Dow Jones Industrial Average climbed 1.7 percent to 10,844.97. JP Morgan Chase & Co. boosted its Brent price forecast for the fourth quarter of this year to $83 a barrel. The European benchmark, which is used to price two-thirds of global oil, will average $90 a barrel in the fourth quarter of 2011, the company predicted in a research note today.