* U.S. factory orders rose more than expected in Sept.
* U.S. stocks to show rise in crude, gasoline - poll
* Dollar index <.DXY> rises 0.6 pct to one-month high
(Recasts, updates, adds byline and details, changes dateline
from LONDON)
By Joshua Schneyer
NEW YORK, Nov 3 (Reuters) - Oil rose to $79 a barrel after
data showed U.S. factory orders in September expanded at a
quicker pace than expected, signaling potential for more fuel
demand in the world's biggest energy consumer.
Factory orders expanded 0.9 percent in September,
surpassing Wall Street analyst expectations, and factory
inventories fell. []
"Factory orders are a positive sign. This helps the broad
sentiment that an economic recovery will eventually boost fuel
demand and send prices higher," said Gene McGillian of
Tradition Energy in Stamford, Connecticut.
The positive U.S. economic data helped reverse an earlier 2
percent price decline in oil prices on Tuesday, when investors
shunned riskier assets including oil. Crude prices had fallen
as the U.S. dollar firmed to a one-month high against other
currencies and equities fell after disappointing earnings from
Swiss banking giant UBS. []
U.S. crude for December <CLc1> rose $1.07 per barrel to
$79.20 by 1750 GMT. London Brent crude futures <LCOc1> rose
$1.15 to $77.70 a barrel.
Traders were also awaiting weekly U.S. oil inventory data.
Analysts expect the data to show crude inventories rose by 1.5
million barrels last week, although inventories of distillates
like heating oil and diesel fuel were expected to fall,
according to Reuters weekly poll of analysts. []
U.S. oil inventory data for the week to Oct. 30 is due from
industry group American Petroleum Institute late Tuesday,
followed by official data from the U.S. Department of Energy on
Wednesday.
Analysts said a recovery in industrial activity may help
justify higher oil prices. Adding to expectations that
industrial demand may soon recover was news that U.S.investor
Warren Buffett's Berkshire Hathaway has plans to buy railroad
company Burlington Northern Santa Fe for $26 billion, in its
largest-ever acquisition. []
Energy traders have been looking to wider economic data and
equities markets this year for signs of a turnaround in the
economy that could raise oil demand.
OPEC member Venezuela, however, said Tuesday it saw no need
for the producer group, which pumps a third of the world's oil,
to raise crude output when its ministers meet in December.
[]
Some OPEC members have signaled they may call for OPEC to
produce more crude if global crude stocks fall and prices rise.
"We do not share the position of increasing output. We
still notice a lot of instability in the oil market,"
Venezuelan Energy Minister Rafael Ramirez told reporters at a
conference.
Oil and other commodities prices, such as gold, rose in
spite of a firming dollar on Tuesday. Crude has usually been
pressured lower this year when the dollar rises, partly because
it is priced internationally in dollars. The dollar's strength
is also widely seen as a proxy for investors' appetite for
risk, rising when investors seek safer assets.
U.S. crude futures rose to their highest level this year at
$82 per barrel on Oct. 21, but have fallen back as investors
question whether rising prices are justified amid a slow
economic recovery.
The U.S. Federal Reserve starts its two-day meeting later
on Tuesday and is expected to keep interest rates unchanged
near historic lows. But the dollar strengthened partly on
speculation that the Fed may signal it is not beholden to keep
rates low for an "extended period." []
(Additional reporting by Christopher Johnson in London;
Editing by Marguerita Choy)
