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Crude oil surges to 3-week high on broadly weaker U.S. dollar

Published 05/31/2011, 03:56 AM
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Investing.com – Crude oil futures advanced on Tuesday, climbing to a three-week high as a broadly weaker U.S. dollar and renewed worries over unrest in the Middle East and North Africa boosted prices.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at USD102.09 a barrel during European morning trade, jumping 1.68%.     

It earlier rose as much as 1.7% to USD102.11 a barrel, the highest price since May 11. 

The U.S. dollar slumped to a three-week low against the euro amid optimism that the European Union will do more to solve Greece’s sovereign debt crisis.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, declined 0.5% to hit 74.66, after earlier dropping to a four-week low of 74.51.

Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.

Elsewhere, in Yemen, President Ali Abdullah Saleh refused to step down despite efforts by regional nations to broker a peaceful departure, as escalating violence threatened to tip the nation into civil war.

Yemen, which borders top oil exporter Saudi Arabia, is located along the Bab al Mandab strait, which the U.S. Energy Department lists as one of seven “world oil transit chokepoints.”

An estimated 3.2 million barrels of oil a day passed through Bab al Mandab in 2010, according to the Energy Department.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for July delivery rallied 1.47% to trade at USD116.28 a barrel, up USD14.19 on its U.S. counterpart.

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