Oil rises to new 30-month high as dollar weakens

4/6/2011

NEW YORK — Oil rose Wednesday as the dollar declined against other major currencies.

Benchmark West Texas Intermediate gained 40 cents at $108.74 per barrel in midday trading on the New York Mercantile Exchange. It jumped as high as $109.15 earlier in the day — the highest since September 2008.

Prices have climbed for several weeks as the Libyan rebellion shut down most of that OPEC country's exports, and energy traders worried about future supplies from the region. Libya produced nearly 2 percent of the world's oil, and an extended shutdown could threaten the production capacity of other OPEC members that are covering some of the shortage.

Gasoline pump prices have followed oil higher, climbing to a national average of more than $3.71 for a gallon of regular on Wednesday, according to AAA, Wright Express and Oil Price Information Service. Pump prices have increased nearly 64 cents per gallon since the beginning of the year. They're now more than $4 per gallon in California, Hawaii and Alaska.

The dollar, which tends to move in the opposite direction from oil, lost ground against foreign currencies. The euro climbed to a 15-month high against the dollar a day before the European Central Bank was expected to increase interest rates. Oil is priced in dollars, and it has historically risen while the dollar falls and makes crude barrels cheaper for investors holding foreign currency.

Oil rose even though the Energy Information Administration reported that U.S. oil supplies grew more than expected last week, increasing by 2 million barrels. Analysts expected an increase of 1.3 million barrels, according to Platts, the energy information arm of McGraw-Hill Cos. Gasoline demand dropped by 112,000 barrels per day.

In other Nymex trading for May contracts, heating oil added a penny at $3.1936 per gallon and gasoline futures lost 1.29 cents at $3.1884 per gallon. Natural gas fell 5 cents to $4.178 per 1,000 cubic feet.

In London, Brent crude rose 30 cents to $122.19 per barrel on the ICE Futures exchange.