Oil rises above $100 as dollar falls back
NEW YORK (AP) — Oil climbed Wednesday as the dollar weakened against other major currencies. Gas pump prices are still sliding across the country.
A weaker dollar tends to prop up oil and other commodities that are priced in U.S. currency. As the greenback lost ground during the trading session, crude became more affordable for investors holding foreign currency. So the price of oil rose.
Analysts also said that energy markets are still responding to bullish outlooks earlier this week from investment banks that see oil prices will rise in coming months. Goldman Sachs expects benchmark West Texas Intermediate crude to hit $135 per barrel by the end of 2012. Morgan Stanley said Brent will average $120 per barrel this year, while J.P. Morgan thinks Brent will be $130 per barrel in the third quarter.
"They're very cautious about selling after the big boys come out and start pumping up" the price," oil analyst Jim Ritterbusch said.
Benchmark crude for July delivery added $1.30 at $100.89 per barrel in midday trading on the New York Mercantile Exchange. In London, Brent crude gained $2.12 at $114.65 per barrel on the ICE Futures exchange.
Oil rose despite a government report that showed the nation's oil and gasoline supplies grew last week, as demand for petroleum products fell. The Energy Information Administration said crude supplies increased unexpectedly by 600,000 barrels and gasoline supplies rose by 3.8 million barrels. The four-week average oil demand in the U.S. dropped 5.3 percent, while gasoline demand fell 2.1 percent. Demand for diesel fuel and jet fuel also declined.
"The trend has become clearer as pump prices increased" that consumers have been changing their driving habits, said Andrew Lipow, president of Lipow Oil Associates in Houston.
Gasoline pump prices dropped for the 13th day in a row on Wednesday to $3.814 per gallon. Oil analyst Tom Kloza said pump prices should slide another 30 cents by June, though refining problems in Chicago could keep prices up in the Midwest.
In other Nymex trading for June contracts, heating oil rose 6 cents to $2.9819 and gasoline futures picked up a penny at $2.9689 per gallon. Natural gas gained 3 cents at $4.425 per 1,000 cubic feet.
Chris Kahn can be reached at http://www.twitter.com/ChrisKahnAP