Oil rose again Wednesday, passing $109 a barrel at one point, as the dollar weakened against major foreign currencies.
Benchmark West Texas Intermediate gained 49 cents to settle at $108.83 per barrel on the New York Mercantile Exchange. It climbed as high as $109.15 earlier in the day — the highest since September 2008.
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 a day before the European Central Bank was expected to increase interest rates. Oil is priced in dollars, and tends to rise when the dollar falls and makes crude cheaper for investors holding foreign currency.
Oil has 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 in the U.S. 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.
Oil rose even though the Energy Information Administration reported that U.S. crude 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. Platts senior oil analyst Linda Rafield said demand could be falling because of rising pump prices and the high unemployment rate, which is keeping a lid on consumer spending.
In other Nymex trading for May contracts, heating oil added a less than a penny to settle at $3.1912 per gallon and gasoline futures lost 0.84 cent to settle at $3.1929 per gallon. Natural gas fell 8.5 cents to settle at $4.146 per 1,000 cubic feet.
In London, Brent crude rose 4 cents to settle at $121.93 per barrel on the ICE Futures exchange.
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