* Tropical Storm Ida shuts in Gulf of Mexico oil output
* Dollar under pressure, equities rise
* Saudi Arabia lifts Dec oil supply to global oil firms
(Updates prices)
By Edward McAllister
NEW YORK, Nov 9 (Reuters) - Oil rose 3 percent toward $80 a
barrel on Monday after Tropical Storm Ida forced the shut in of
U.S. oil and gas production, helping to support prices.
U.S crude for December delivery rose $2.34 to $79.77 a
barrel by 1:50 p.m. EST (1850 GMT). London Brent crude gained
$2.21 to $78.08.
Ida, the first real storm threat of the 2009 season, was
downgraded from a hurricane on Monday, but production remained
shut in as producers waited for the storm to pass over the
Gulf.
"Crude is up on the weak dollar and the impact of Tropical
Storm Ida, overshadowing some bearish news of the Saudis
raising supplies available and China raising fuel prices," said
Phil Flynn, analyst at PFGBest Research in Chicago.
Crude has been bolstered by stronger equities and a weaker
dollar in recent months, as investors look to wider macro
economic data for a hint of economic recovery and a rebound in
energy demand.
U.S. stocks jumped, extending last week's gains, on renewed
risk-taking sentiment after the Group of 20 pledged to keep
economic stimulus in place until a recovery was assured. []
The news also sent the dollar down across the board,
helping bolster crude prices. [] A weak dollar makes
dollar-denominated commodities like crude cheaper for holders
of other currencies and helps support prices.
"I think it's more buy on the rumour, sell on the fact. It
does not seem as if (Ida is) strong enough to create structural
damage," said Olivier Jakob of Petromatrix.
"Nothing fundamental has really changed, but you buy
because of the dollar and equities."
Oil prices have rallied from a low of below $33 a barrel
last December, in line with a rally sustained for much of the
year on equities.
PRICES VULNERABLE
For oil prices, the market's failure to sustain the
strength that took it to a year-high of $82 a barrel in October
was seen as bearish, and speculators have begun to unwind long
positions.
The latest data from the Commodity Futures Trading
Commission on Friday showed money managers had reduced their
net long crude positions on the New York Mercantile Exchange.
Speculative length is still historically high and analysts said
further selling was likely.
Fuel inventories are brimming, with U.S. distillate stocks,
which include heating oil and diesel, at their highest levels
in more than a quarter of a century.
Potentially adding to the oil surplus, Saudi Arabia, the
world's top oil exporter, has increased December supplies to
large companies, and one Asian customer is expected to receive
full contract volume.
For most, however, deep output cuts were still being
enforced and supplies to many were around steady.
Some in the Organization of the Petroleum Exporting
Countries have raised the possibility of an increase in
production when the group meets in December, but only if oil
prices continue to rise and economic recovery is maintained.
United Arab Emirates Oil Minister Mohammed al-Hamli said at
the weekend that raising oil production was not on the agenda
for the producer group.
(For a graphic on the path of Hurricane Ida click on:
http://graphics.thomsonreuters.com/119/US_HKIDA1109.gif)
(Additional reporting by Matthew Robinson and Robert Gibbons
in New York, Barbara Lewis and Joe Brock in London; editing by
Jim Marshall)
