NEW YORK - Oil prices shot above $80 a barrel yesterday as a weakened US dollar created more turbulence in energy markets than a tropical storm heading into the Gulf of Mexico.
Ida had helped push crude prices higher all morning, but just as the then-hurricane was demoted to a tropical storm, the euro pushed past the $1.50 level for the first time this month and sent oil even higher. Investors holding euros or other strong currencies can buy more dollar-based crude when the US currency falls.
Demand for crude is weak, but investment in crude futures has paid off this year. A barrel of oil cost $32 in December.
Benchmark crude for December delivery rose $2 to settle at $79.43 a barrel on the New York Mercantile Exchange.
Uncertainty about Ida supported prices at least until mid-morning. Weather Insight LP is expecting 700,000 barrels per day of crude oil production to be shut in, and 3 billion cubic feet per day of natural gas production to be taken off line until about tomorrow.
Given the huge surplus in oil, natural gas, and gasoline, the reaction to Ida appeared muted.
