LONDON: Crude oil prices rose on Tuesday as traders took their cue from the weak US currency, which was hit by a report that Gulf States have 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.
New York's main contract, light sweet crude for November delivery gained 79 cents to 71.20 dollars a barrel. Brent North Sea crude for November delivery rose 77 cents to 68.81 dollars a barrel in London.
"Pressure on the dollar comes from reports in the London daily The Independent," said PVM oil market analyst Tamas Varga.
The dollar's future as the world's top currency was thrown into doubt on Tuesday as The Independent said Arab states had launched secret moves with China and Russia to stop using the greenback for oil trading.
Arab states have launched moves with China, Russia, Japan and France to stop using the dollar for oil trades, added the paper.
"Such a step, although dismissed almost immediately by Saudi Arabia, Russia, the UAE and Algeria, obviously weakens the dollar, which should be supportive for oil prices -- in dollar terms that is," said analyst Varga.
Kuwaiti Oil Minister Sheikh Ahmad Abdullah al-Sabah also denied the report.
"Not at all," Sheikh Ahmad said when asked to comment on the report. "At our level, no. We have never discussed or proposed this."
He 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 60-80 dollars a barrel.
"This year no way. It's not possible," the minister told reporters when asked if the Organization of Petroleum Exporting Countries (OPEC) could decide to raise output at a ministerial meeting in December.
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