Nov. 9 (Bloomberg) -- Crude oil rose as a falling dollar bolstered investor demand for commodities and Tropical Storm Ida entered the Gulf of Mexico, forcing BP Plc and Chevron Corp. to cut output.

Oil climbed after the greenback fell against a basket of six major currencies following a decision by the Group of 20 governments to maintain economic stimulus measures. Workers were evacuated in the Gulf, an area that accounts for 27 percent of U.S. crude production and 15 percent of natural gas output.

“The G-20 didn’t comment about the dollar, which indicates that no action will be taken, and the greenback will further deteriorate,” said Michael Fitzpatrick, vice president of energy with MF Global in New York. “A weak dollar translates into higher oil prices.”

Crude oil for December delivery rose $2, or 2.6 percent, to settle at $79.43 a barrel on the New York Mercantile Exchange. Futures are up 78 percent this year.

Prices dropped $2.19, or 2.8 percent, 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 energy-consuming country, climbed to 10.2 percent, the highest in 26 years.

“All of the weak economic data from last week is still keeping a lid on prices,” said Phil Flynn, vice president of research at PFGBest in Chicago. “We will probably continue to see weak fuel demand because of the weak economy.”

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.

Dollar Decline

The Dollar Index, which tracks the dollar against currencies including the yen, pound and Swedish krona, declined 1 percent to 75.056.

Gold climbed to a record as investors purchased the metal to hedge against a falling dollar. Gold futures for December delivery rose $5.70, or 0.5 percent, to settle at a record $1,101.40 an ounce on the New York Mercantile Exchange’s Comex division. The contract touched $1,111.70, an all-time high intraday price.

The Reuters/Jefferies CRB Index of 19 commodities advanced 1.7 percent to 274.09.

Rising equities also helped push energy prices higher. The Standard & Poor’s 500 Index added 2.2 percent to 1,093.08, and the Dow Jones Industrial Average increased 2 percent to 10,226.94, the highest in 13 months.

“Hot money is chasing the best returns,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York. “There’s an assumption that a strong equity performance will translate into increased petroleum demand.”

Storm Track

Ida’s maximum sustained winds decreased to about 70 miles (129 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 60 miles southeast of the mouth of the Mississippi River at 3 p.m. local time and was moving north at 18 mph, the center said.

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 handle 1 million barrels a day.

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.

Gulf Production

Energy producers in the U.S. have idled 29.6 percent of oil and 27.5 percent of natural-gas output in the Gulf because of the storm, the first of this hurricane season to disrupt output, according to the Minerals Management Service, which is part of the U.S. Interior Department. Workers from 126 production platforms and eight rigs have been evacuated.

“After wreaking havoc in Nicaragua and Costa Rica, 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.”

Brent crude for December settlement rose $1.90, or 2.5 percent, to end the session at $77.77 a barrel on the London- based ICE Futures Europe exchange.

Saudi Increases

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.

Oil volume in electronic trading on the Nymex was 469,915 contracts as of 3:21 p.m. in New York. Volume totaled 594,328 contracts on Nov. 6, up 6.7 percent higher than the average over the past three months. Open interest was 1.22 million contracts on Nov. 6.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net

Last Updated: November 9, 2009 16:30 EST