Nov. 9 (Bloomberg) -- Crude oil rose from a one-week low as Hurricane Ida entered the Gulf of Mexico, forcing BP Plc and Chevron Corp. to cut output.

Crude climbed above $78 a barrel as companies evacuated workers in the Gulf of Mexico, an area that accounts for 27 percent of U.S. crude production and 15 percent of natural gas output. The dollar declined against 14 of its 16 major counterparts, making commodities more attractive as alternative investments.

“After wreaking havoc in Nicaragua and Costa Rica, Hurricane Ida is now threatening oil and gas production and oil refineries in the U.S. Gulf,” said Christopher Bellew, senior broker at Bache Commodities in London. “That and a weak dollar is behind the higher prices.”

Crude oil for December delivery rose as much as $1.52, or 2 percent, to $78.95 a barrel on the New York Mercantile Exchange. It was at $78.28 at 1:19 p.m. London time.

The contract dropped to $77.43 on Nov. 6, the lowest settlement since Oct. 30, after a report showed unemployment in the U.S., the world’s biggest oil user, climbed to 10.2 percent, the highest in 26 years.

Oil also gained after the EFE news service reported that Petroleos Mexicanos, Mexico’s state oil company, shut 90 wells at onshore fields in the western states of Veracruz and Tabasco because of storms and flooding. Meanwhile, Saudi Arabia signaled it may boost output to halt the gains.

Weak Dollar

Oil reached a one-year high of $82 on Oct. 21, as rising equities boosted investor confidence and a falling dollar encouraged buying of physical assets.

The dollar fell against the euro today after the Group of 20 governments agreed to keep stimulus measures and remained silent on the currency’s decline this year. Investors purchase commodities including crude as an inflation hedge as the currency drops.

“People are nervous about the dollar. It is trading close to $1.50” versus the euro, said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt. “It is the main reason for the move in commodities today.”

The dollar weakened to $1.4990 per euro as of 1:20 p.m. in London from $1.4847 on Nov. 6.

Ida’s maximum sustained winds slowed to about 80 miles (130 kilometers) per hour, from 105 mph earlier today, the U.S. National Hurricane Center said in its latest advisory. Ida’s center was located about 235 miles south-southeast of the mouth of the Mississippi River at 6 a.m. U.S. Central time, it said.

LOOP Halted

The Category 1 storm was moving north-northwest at 16 mph and may still be at hurricane strength when it approaches the U.S. Gulf Coast near Alabama and the Florida Panhandle in the early hours of tomorrow morning.

The Louisiana Offshore Oil Port, or LOOP, stopped taking loadings from tankers at about noon yesterday because of rough seas, said Barb Hestermann, a spokeswoman. Deliveries to refiners are being met through crude stored onshore. The system can off-take 1 million barrels a day, or about 12 percent of U.S. imports.

Chevron, the second-largest U.S. oil company, said it has shut some of its Gulf output and moved away some “non-essential personnel.”

BP has started “some precautionary curtailment of production,” according to a recorded statement on its hotline.

Saudi Increases

Exxon Mobil Corp., the world’s biggest oil company, said its operations in the Gulf of Mexico are normal and it’s monitoring the weather, according to an e-mail from spokesman David Eglinton. Royal Dutch Shell Plc said it’s “securing” offshore facilities though drilling isn’t affected.

Brent crude for December settlement rose as much as $1.50, or 2 percent, to $77.37 a barrel on the London-based ICE Futures Europe exchange. It was at $76.65 at 1:20 p.m. local time.

Saudi Arabian Oil Co. will supply full contracted oil shipments to several refiners in Asia for the first time in more than a year, refinery officials said today.

The company, also known as Saudi Aramco, will provide the cargoes in December under long-term contracts, according to a Bloomberg News survey of refinery officials in Japan, South Korea, China and Thailand, who asked not to be identified because of confidential agreements. The refiners had been receiving cuts of between 10 percent and 15 percent in November.

This would be the first time since November 2008 that refiners in Japan would receive full volumes, which may indicate that OPEC’s largest exporter will let its production quota discipline slip to halt this year’s rally in crude prices.

The International Energy Agency releases its annual World Energy Outlook in London tomorrow. The adviser to oil-consuming nations issues its monthly oil market report on Nov. 12.

To contact the reporters on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net;

Last Updated: November 9, 2009 08:52 EST