Oil Rises to Record as Falling Dollar Prompts Commodity Buying

By Christian Schmollinger

April 15 (Bloomberg) -- Crude oil rose to a record as investors purchased futures contracts to hedge against the falling dollar after the Group of Seven failed to end the currency's slide.

The dollar was at $1.5827 per euro as of 11:19 a.m. in Tokyo from $1.5832 late in New York yesterday. It touched $1.5913 on April 10, the highest level since the European currency's debut in 1999. China, the world's second-largest oil consumer, imported 25 percent more crude in March versus a year ago, offsetting projected demand declines in the U.S.

``Traders are skeptical that the central bankers will intervene to help the dollar so investors are selling dollars and buying oil and other commodities,'' said Victor Shum, senior principal at Purvin & Gertz Inc. in Singapore. China's growing consumption of oil ``really counterbalances the decline in the U.S. and'' developed countries.

Crude oil for May delivery climbed as much as 72 cents, or 0.6 percent, to $112.48 on the New York Mercantile Exchange, the highest since futures began trading in 1983. It was at $112.40 at 11:14 a.m. in Singapore. Prices have gained 77 percent from a year earlier.

Futures yesterday rose $1.62, or 1.5 percent, to settle at $111.76 a barrel, the highest close since trading began in 1983.

Brent crude for May settlement rose as much as 61 cents, or 0.6 percent, to $110.45 a barrel, an all-time intraday high, at 10:46 a.m. Singapore time on London's ICE Futures Europe exchange. The contract yesterday gained $1.09, or 1 percent, to close at a record $109.84.

BP Stake

The surge in oil prices has lured investors to buy shares of oil producers. BP Plc said it welcomes all shareholders in the wake of a Chinese sovereign fund buying a 1 percent stake in Britain's largest company by market value, company spokesman David Nicholas said today.

The fund purchased just less than 1 percent of BP, with the stake worth about 1 billion pounds ($1.97 billion), the Daily Telegraph reported.

The G-7 group of nations said after a weekend meeting in Washington that it would ``monitor exchange markets closely, and cooperate as appropriate.''

Oil has risen 37 percent and the dollar has dropped 12 percent against the euro since the Federal Reserve began lowering interest rates on Sept. 18.

The likelihood of the Fed cutting its target rate for overnight lending between banks by a half-point to 1.75 percent on April 30 rose to 52 percent from 36 percent a week ago, futures contracts on the Chicago Board of Trade show.

Mexican Ports

Petroleos Mexicanos, the third-largest supplier of crude to the U.S., shut its crude oil export terminal on the Pacific coast yesterday, the fourth terminal to close because of bad weather since April 13.

The terminal at the port of Salina Cruz closed today, Mexico's Merchant Marine reported in a weather bulletin posted on its Web site. The three Gulf of Mexico terminals at the ports of Pajaritos, Dos Bocas and Cayo Arcas are still closed.

Asian Stocks Gain, Led by Energy Producers, as Oil Hits Record

By Chen Shiyin

April 15 (Bloomberg) -- Asian stocks advanced, led by energy producers and trading companies, after crude oil prices rose to a record and silver and gold prices gained.

Santos Ltd., Australia's third-largest oil explorer, climbed the most in three weeks and Cnooc Ltd. jumped in Hong Kong. Mitsubishi Corp., which generates more than half its profit from commodities dealing, rose after Deutsche Bank AG recommended investors buy shares in Japanese trading houses. Chinese stocks dropped to a one-year low after Angang Steel Co.'s profit missed analyst estimates on higher costs.

``We prefer companies with pricing power, particularly within the commodity sector,'' said Daphne Roth, Singapore-based vice president of equity research at ABN Amro Private Bank, which oversees $22 billion of Asian assets. ``We're just seeing the beginning of earnings downgrades and it's important to watch how higher raw material prices will affect companies' bottom lines.''

The MSCI Asia Pacific Index added 0.1 percent to 142.46 as of 12:59 p.m. in Tokyo.

Japan's Nikkei 225 Stock Average gained 0.4 percent to 12,973.06. China's CSI 300 Index slumped 1.8 percent. Australian stocks rose the most among Asian benchmarks, led by Insurance Australia Group Ltd., after rejecting a takeover proposal from QBE Insurance Group Ltd.

U.S. stocks fell yesterday on the slowest trading day of the year in New York after Wachovia Corp. reported an unexpected first-quarter loss and Goldman Sachs Group Inc. predicted more disappointing earnings will drive the market lower.

Record Oil

Santos, Australia's third-largest oil and gas explorer, jumped 3.3 percent to A$15.60, a six-month high. Woodside Petroleum Ltd., the second biggest, gained 3.9 percent to A$56.40. Cnooc, China's largest offshore oil explorer, rose 0.7 percent to HK$12.28.

Crude oil for May delivery advanced as much as 0.6 percent to a record $112.48 a barrel in New York today. Futures yesterday added 1.5 percent to $111.76, the highest close since trading began in 1983.

Mitsubishi Corp. climbed 2.3 percent to 3,590 yen, set for its highest close since Nov. 2. Mitsui & Co., Japan's second- biggest trading house, added 2.1 percent to 2,460 yen.

Michael Wheatley, an analyst at Deutsche Bank in Tokyo, boosted his rating on both shares to ``buy'' from ``hold'' in a report dated yesterday.

Angang Steel, JFE

China's CSI 300 fell to the lowest since April 27, adding to yesterday's 6.5 percent slump and bringing its decline this year to 35 percent. The benchmark dropped yesterday after central bank chief Zhou Xiaochuan said there's room for the nation's lending and deposit rates to increase.

Angang Steel tumbled 8.7 percent to 17.85 yuan in Shenzhen after the steelmaker said full-year profit rose 6 percent to 7.53 billion yuan ($1.07 billion). That's less than the 8.7 billion yuan average estimate of analysts compiled by Bloomberg.

Japanese steelmakers gained after the Nikkei newspaper said price hikes and cost controls may help offset higher raw materials prices at JFE Holdings Inc. and larger rival Nippon Steel Corp.

JFE Holdings Inc., the world's third-biggest steelmaker, jumped 6.3 percent to 4,880 yen, the highest since Feb. 1, while Nippon Steel Corp., a larger rival, added 3.4 percent to 516 yen.

Kepco, Kubota

Concern record oil prices will raise fuel costs weighed on shares of utilities. The MSCI Asia Pacific Utilities Index was the biggest decliner on the broader regional index.

Korea Electric Power Corp., the nation's largest utility, fell 0.8 percent to 31,350 won. Tokyo Electric Power Co. dropped 0.9 percent to 2,635 yen, set for the lowest close in three weeks. Chubu Electric Power Co., Japan's third-largest power producer, lost 0.8 percent to 2,485 yen.

Kubota Corp. slumped 4.3 percent to 640 yen after Morgan Stanley cut its rating on the Japanese machinery maker to ``equal-weight'' from ``overweight.''

Insurance Australia, the nation's largest auto and home insurer, surged 11 percent to A$4.30, the biggest gain by percentage on MSCI's Asian benchmark, after rejecting a bid by QBE Insurance, Australia's biggest property and casualty insurer.

QBE fell 1.6 percent to A$22.84, extending a six-day, 7.9 percent retreat.

To contact the reporter for this story: Chen Shiyin in Singapore at schen37@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net.