Oil climbed Wednesday as the dollar weakened
against other major currencies.
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 West Texas Intermediate
crude, the U.S. benchmark, 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
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 U.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
“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.
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