Oil recovers to post gains
Prices recover from session lows as investors cheer Warren Buffet's $44 billion bet on U.S. railway operator Burlington Northern and gold prices spike.
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| Click the chart for current oil prices. |
NEW YORK (CNNMoney.com) -- Oil erased earlier losses and gained on Tuesday as investors responded to Warren Buffett's $44 billion investment in U.S. railway operator Burlington Northern Santa Fe.
The advance came as the price of gold surged to an all-time high, sparking a broad rally in the commodities market.
December crude rose $1.47, or 1.88%, to $79.60 a barrel, after hitting hitting a low of $76.55 earlier in the session.
"There's a lot of speculative money poring into commodities," said James Cordier, president of commodities trading firm Liberty Trading Group. "Investors are being emboldened by the big bet that was placed out of Omaha."
Omaha-based Berkshire announced plans Tuesday to increase its stake in Burlington Northern to 100% with a cash-and-stock offer worth $100 per share.
The news was seen by some investors as a vote of confidence in a U.S. economy, and raised bets that demand for energy could recover soon.
"It's getting people to think twice that commodities are at their highs," Cordier said. "The idea is that economy is going to turn around and they're going to need energy when it does."
Supply concerns. Gains in the oil market were limited by concerns about record-high inventory levels and a slightly stronger U.S. dollar.
The American Petroleum Institute will issue its weekly report on U.S. inventories later Tuesday, while the U.S. government Energy Information Administration will issue its supply data on Wednesday.
Analysts at MF Global expect the EIA report to show that the nation's supplies of crude oil rose 1.5 million barrel in the week ended Oct. 30. Gasoline stocks are forecast to rise 500,000 barrels and distillate supplies are seen up 1 million barrels.
Earlier Tuesday, the U.S. dollar rose to a one-month high against a basket of currencies. The greenback was up 0.9% versus the euro and 0.2% against the pound.
In addition to supply data, traders are also awaiting economic reports and the outcome of the Federal Reserve's two-day policy meeting, which gets underway Tuesday.
The government's closely watched monthly jobs report is due Friday. Economists surveyed by Briefing.com believe payrolls shrank by 175,000 jobs in October after a loss of 263,000 jobs in September.
Meanwhile, the U.S. central bank is widely expected to hold interest rates at historic lows near 0%. Investors will be tuning into the Fed's statement, which is due out Wednesday, for any hints as to when it plans to start removing the billions of dollars of stimulus funds it has poured into the economy since the financial crisis took hold.
In its most recent report, the Fed said the economy has shown mild signs of stabilizing. Housing and manufacturing continued to improve but the labor market remained weak or mixed. 
