Oil has more than doubled over the past year as the dollar dropped against the euro. The U.S. currency weakened after the Federal Reserve gave no signal of higher interest rates yesterday. The head of Libya's national oil company said the country may reduce output because the market is oversupplied.
Crude oil for August delivery rose $3.78, or 2.8 percent, to $138.33 a barrel at 9:10 a.m. on the New York Mercantile Exchange, after rising as much as $4.40 a barrel. Prices reached a record $139.89 on June 16.
The dollar is also down on a forecast that the European Central Bank will boost interest rates. The dollar's drop against the euro made commodities cheaper for buyers outside the U.S. The dollar was at $1.5727 per euro as of 9:20 a.m. New York time, compared with $1.5574 earlier.
The Federal Reserve yesterday left its benchmark interest rate at 2 percent and said ``uncertainty about the inflation outlook remains high'' as energy and commodity prices continue to rise. Leaving the interest rate unchanged ended the most aggressive series of rate cuts in two decades.
Libya's National Oil Corp. Chairman Shokri Ghanem declined to say when a decision would be made on whether to lower Libyan production or give any indication of the size of the cut under consideration.
He said the reductions may also be made because of threats of sanctions against Iran and U.S. legislation allowing lawsuits against the Organization of Petroleum Exporting Countries.
Brent crude oil for August settlement rose $3.37, or 2.5 percent, to $137.70 a barrel on London's ICE Futures Europe exchange. Prices climbed to a record $139.32 on June 16.