Oil rose to near US$133 a barrel Monday in Asia on persistent worries about global petroleum supplies and the outlook for the U.S. dollar.
The dollar has weakened over the last week after a modest recovery, and investors will be watching economic data out of the United States to be released over the next few days for further clues about the health of the world's biggest economy.
"The dollar's been swinging down again," said Mark Pervan, senior commodity strategist at Australia & New Zealand Bank in Melbourne, and that's "going to sway sentiment."
Oil and other hard commodities are seen as hedges against a weakening greenback and inflation. Also, a weak dollar, the currency of international oil trade, makes petroleum products
less expensive to Asian and European buyers.
This week, investors will be watching for what implications U.S. consumer confidence, new home sales, gross domestic product and other economic data might have for the dollar and oil prices,
"It's a pretty price sensitive week for economic data," Pervan said. "The data we're seeing out of the U.S. at the moment looks pretty weak. You'd expect that trend to continue, pushing further down on the dollar."
The dollar, one of the factors that has fed oil's rally from about US$65 a year ago, was steady against the yen and the euro in Asian currency trading late afternoon in Tokyo after losing
ground last Friday in New York.
Late afternoon in Singapore, light, sweet crude for July delivery was up 77 cents at US$132.96 a barrel in electronic trade on the New York Mercantile Exchange. The contract rose US$1.38 to settle at US$132.19 a barrel on Friday.
Nymex floor trading will be closed Monday for Memorial Day.
Prices got a boost late in the day when militants in Nigeria claimed they destroyed an oil pipeline and killed 11 soldiers in a gunbattle.
The Movement for the Emancipation of the Niger Delta says it attacked the pipeline operated by a Royal Dutch Shell PLC joint venture early Monday. Shell officials were not immediately available for comment, and a military spokesman had no immediate confirmation of any overnight incidents.
Nigeria is Africa's largest oil producer and a major supplier to the U.S. market. Years of unrest, though, have cut off nearly a quarter of its oil output.
Last week, a series of supply warnings rattled composures, and Thursday, a report that the International Energy Agency - the energy watchdog for the most industrialized nations - is in the
process of lowering its forecast for long-term global oil supply, sent crude futures rocketing to an all-time high of US$135.09 a barrel.
Investors are also worried about a growing squeeze on global diesel supplies as demand in China surges has sparked a massive run up in heating oil prices.
Over the weekend, China's top economic planning agency again urged oil and power companies to make sure there are enough supplies for earthquake-hit areas and for the Beijing Olympic
Games in August.
"They certainly want to have a buffer of supply ... so there's pressure on the upside from demand in Asia," Pervan said.
The U.S. driving season officially kicked-off with the long Memorial Day weekend there, and even if demand for gasoline and diesel is lower than it was a year ago, it will still be stronger
than it was in the preceding months, he said.
In other Nymex trading, heating oil futures rose 6.64 cents to US$3.932 a gallon (3.8 liters) while gasoline prices rose 3.14 cents to US$3.4274 a gallon. Natural gas futures rose 16.7 cents
to US$12.024 per 1,000 cubic feet.
July Brent crude rose 80 cents to US$132.37 a barrel on the ICE Futures exchange in London.(**)