Oil prices rose Monday after global financial leaders expressed concerns about volatility in major currencies and the dollar slipped against the euro.
Light, sweet crude for May delivery on the New York Mercantile Exchange rose $1.09 to $111.23 a barrel in electronic trading by midday in Europe. The contract rose 3 cents to settle at $110.14 a barrel Friday.
Crude oil's recent run above $100 a barrel has been largely attributed to a steadily depreciating U.S. currency, because a weakening dollar attracts investors to commodities as a hedge against inflation.
The Group of Seven industrialized nations said in a statement Friday that "there have been at times sharp fluctuations in major currencies, and we are concerned about their possible implications for economic and financial stability."
The group pledged to closely monitor the situation and "cooperate as appropriate."
The dollar fell further in morning trading Monday. The 15-nation euro bought $1.5839, up from the $1.5835 it bought in New York late Friday.
Crude prices have come under pressure after the International Energy Agency last Friday lowered its global oil demand forecast for the year by 310,000 barrels a day to 87.2 million barrels a day, citing lower economic output expectations in the U.S. and elsewhere.
JBC Energy in Vienna, Austria, called the IEA report the "strongest downward monthly revision in years," and also noted that gasoline consumption in the United States was expected to fall lower "for the first time in years."
More negative U.S. economic data also appeared to have taken steam out of oil's precipitous price rise this week. The Commerce Department reported last week the first decline in oil imports in a year - a possible sign that high prices and an economic downturn were hurting crude sales.
"The weight of the gloomy economic picture in the U.S. and to a certain extent other countries ... is getting heavier, and it's putting a heavy lid on oil pricing," Shum said. However, he said, oil's movements continue to be largely influenced by fluctuations in the dollar.
Nymex crude "continues to be tightly correlated" to the movements of the dollar, said a report by Olivier Jakob of Petromatrix in Switzwerland.
"The main reason why the correlation is so strong is that it has become a self-fulfilling trade with very few volunteers to trade against it until it is proven broken."
In other Nymex trading, heating oil futures fell 1.71 cents to $3.1804 a gallon while gasoline prices dropped 2.65 cents to $2.7808 a gallon. Natural gas futures declined 1.2 cents to $9.913 per 1,000 cubic feet.
In London, Brent crude futures fell 58 cents to $108.17 a barrel on the ICE Futures exchange.
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Associated Press Writer Gillian Wong in Singapore contributed to this report.
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