NEW YORK (Reuters) - Oil rose more than $1 on Monday as the dollar slipped and tensions between the United States and Iran stoked supply concerns.
The gains came amid a wider commodity rally and snapped three days of losses for crude that had been triggered by concerns a potential U.S. recession would cut demand growth in the world’s top consumer.
U.S. oil settled $1.51 to $94.20 a barrel, while London Brent crude rose $1.85 to $92.92 a barrel.
Crude, which remains below the peak $100.09 struck on January 3, got a boost from comments by President George W. Bush against OPEC member Iran.
During a trip to the Middle East, Bush accused Iran of threatening global security by backing militants and urged his Gulf Arab allies to confront the issue.
The comments rekindled worries the tensions between Washington and Tehran over Iran’s nuclear program could disrupt shipments from the fourth largest crude exporter.
Further support for prices came from militant attacks in fellow OPEC country Nigeria, where Shell RDS.L declared force majeure on exports of Forcados crude following a pipeline attack last week.
Militant raids since 2006 have knocked out a fifth of the country’s oil output capacity.
Strength also came from the weakening dollar, which plumbed seven-week lows against the euro and yen on expectations weak U.S. corporate earnings will prompt further interest rate cuts.
The greenback’s tailspin has helped firm prices for commodities denominated in the U.S. dollar, with gold and platinum surging to record highs.
Traders are also watching cooler weather in the U.S. Northeast, the world’s biggest heating oil market, in the wake of a winter storm.
U.S. heating demand is expected to average just 2.4 percent below normal this week, up sharply from the previous week, according to the National Weather Service.
OPEC Secretary-General Abdullah al-Badri on Monday said the producer group would raise oil output if needed at meetings on February 1 and March 5, but added supply was enough for now and speculation was driving prices.
Crude speculators on the New York Mercantile Exchange boosted net long positions to a two-month high in the week to January 8, as oil prices struck a record $100 a barrel.
A Reuters poll of analysts forecast weekly data from the U.S. Energy Information Administration due out Wednesday would show a 1.2 million barrel rise in crude inventories in the week to January 11, a 1.2 million barrel build in distillate stocks and a 2.5 million barrel build in gasoline inventories.
Additional reporting by Santosh Menon in London, Fayen Wong in Sydney and Alex Lawler in London; editing by Jim Marshall