Crude Oil Ends Higher On U.S. Debt Deal Hopes

(RTTNews) - U.S. crude oil ended higher Monday, mostly on news of a possible deal on the budget and debt ceiling with President Barack Obama all set to meet Congressional leaders later in the day, even as the dollar trended lower against some select currencies. Nonetheless, the gains were capped after data from China showed inflation to have climbed with exports declining.

Although lawmakers in Washington have so far failed to agree on any deal to end the government shutdown and avert a debt default, there was ray of hope on the news that President Barack Obama set to meet Congressional leaders later in the day to discuss the standoff.

A meeting between President Barack Obama and the House Republican leadership last Thursday failed to find any solution. Republicans had proposed to temporarily raise the nation's debt limit to avoid a default and allow time for negotiations, but this was turned down by Obama since there was no solution to the budget problem.

The U.S. Treasury has indicated that unless a deal is clinched by October 17 to raise the $16.7 billion debt ceiling limit, the world's largest economy is likely to risk a sovereign debt default.

Light Sweet Crude Oil futures for November delivery, the most actively traded contract, gained $0.39 or 0.4 percent to close at $102.41 a barrel on the New York Mercantile Exchange Monday.

Crude prices for November delivery scaled a high of $102.62 a barrel intraday and a low of $101.06.

Last week, oil futures shed 1.8 percent with developments in Libya and the Organization of the Petroleum Exporting Countries lifting its global oil demand forecast. A sharp jump in U.S. crude stockpiles and the ongoing fiscal woes linked to the budget and debt, also negatively impacted prices.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.28 on Monday, down from 80.41 late Friday in North American trade. The dollar scaled a high of 80.39 intraday and a low of 80.13.

The euro traded higher against the dollar at $1.3566 on Monday, as compared to its previous close of $1.3562 late Friday in North America. The euro scaled a high of $1.3597 intraday and a low of $1.3544.

In economic news, China's consumer price inflation climbed to its highest level in seven months in September, while industrial producer prices fell for a nineteenth consecutive month, data from the National Bureau of Statistics showed Monday.

China's CPI inflation rate rose to 3.1 percent in September from 2.6 percent in August. Economists had forecast an increase to 2.8 percent. The rate was the highest since February, when inflation was at 3.2 percent. Producer prices fell 1.3 percent year-on-year in September, slower than August's 1.6 percent decline. Economists had forecast a 1.4 percent drop.

China's exports declined unexpectedly, dropping by 0.3 percent annually in September, while imports picked up at a faster-than-expected rate of 7.4 percent in September. Economists had forecast imports to grow 7 percent. On a monthly basis, exports fell 2.6 percent, while imports rose 5.1 percent. The trade balance showed a surplus of $15.21 billion, but less than the August surplus of $28.5 billion and notably lower than the $26.25 billion surplus expected by economists.

Meanwhile, India's wholesale price inflation rose unexpectedly to a seven-month high in September on higher food inflation, raising the scope for another rate hike from the central bank. Inflation, measured by the wholesale price index, increased to 6.46 percent in September from 6.10 percent in the previous month, the Ministry of Commerce and Industry said Monday. Inflation was forecast to slow marginally to 6 percent.