Crude oil prices rose today as traders took their cue from the weak US currency, hit by a report that Gulf states considered dropping the dollar for oil transactions.
A struggling greenback tends to boost crude because the dollar-denominated commodity becomes cheaper for foreign buyers holding stronger currencies.
US crude delivery gained $1.20 to $71.61 a barrel, while London Brent North Sea rose $1.36 to $69.40 a barrel in late London trade.
Kuwaiti Oil Minister Sheikh Ahmad Abdullah al-Sabah said he was 'unaware' of any Gulf state making such a proposal.
Sheikh Ahmad also ruled out any OPEC production increase this year and predicted oil prices would remain at $60 to $80 a barrel.
'This year no way. It's not possible,' the minister told reporters when asked if OPEC could decide to raise output at a ministerial meeting in December.
'In December, OPEC will be looking at the market situation next year,' said Sheikh Ahmad, who urged OPEC members for greater compliance with their production quotas.
Market players continued to digest economic data from the US that could help indicate demand prospects.
New data released yesterday by the Institute of Supply Management showed the US services sector grew in September for the first time in a year with its non-manufacturing index rising to 50.9% from 48.4% in August. Any number above 50 percent indicates growth.
Services makes up the lion's share of US economic activity and employment, and is therefore critical to recovery from the long recession. The ISM index had declined for 11 consecutive months.
The ISM data followed last week's figures by the US Labor Department showing job losses accelerated to 263,000, sending the unemployment rate to a 26-year high of 9.8 percent in September.
The dollar fell today, hit by the prospect US interest rates will stay low for some time and a media report, later denied, that Gulf states were planning to stop using the greenback for oil transactions.
Britain's Independent newspaper reported on its website that Gulf countries have held secret meetings with officials outside the region to discuss dropping the dollar for oil trade.
The countries would instead use a basket of currencies, including the yen, the paper said, citing Gulf Arab and Chinese banking sources in Hong Kong.
The report increased recent negative sentiment toward the dollar, dealers said.
