Oil jumps nearly 3% on storm and weak dollar
Crude rallies $2 as the U.S. dollar slumps and Tropical Storm Ida approaches the Gulf Coast.
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| Click the chart for current oil prices. |
NEW YORK (CNNMoney.com) -- Oil prices rallied Monday amid bets the dollar will continue to depreciate and lingering concerns that Tropical Storm Ida could disrupt production in the Gulf of Mexico.
Crude oil for December delivery jumped $2, or 2.58%, to settle at $79.43 a barrel.
The advance came as the dollar weakened broadly against rival currencies after the G-20 concluded a weekend meeting without publicly addressing the U.S. currency's ongoing decline.
"Weakness in the dollar is what has everyone buying commodities today," said James Cordier, president of Liberty Trading Group.
The dollar index (DXY), which measures the greenback's value against a basket of currencies, fell 0.8% to 75.03 from 75.77.
A weaker greenback makes commodities priced in dollars cheaper for buyers in other currencies.
Analysts expect the dollar to fall further given the outlook for exceptionally low interest rates in the United States and the nation's ever-expanding budget deficit.
Tropical Storm Ida, which was downgraded from hurricane status, is expected to make landfall along the northern Gulf Coast Tuesday morning, according to the National Hurricane Center.
British Petroleum (BP) said Sunday that "some precautionary curtailment of production has taken place" in anticipation of the storm. But other energy producers, including Royal Dutch Shell (RDS.A), are not expecting any supply disruptions.
Oil prices have risen from a low of about $34 last December as the global economy has shown signs of improvement, raising speculation that the world's thirst for energy will rebound.
However, the market has struggled to push prices above this year's high near $82 a barrel as U.S. inventories of crude oil and gasoline remain at record highs.
Cordier said he expects oil to trade in a range between "the high $70s and the low $80s."
"The weak dollar will keep it from falling, while high inventories keep it from going higher," he said. 
