(Recasts, adds details, updates prices)
By Alex Lawler
LONDON, Feb 28 (Reuters) - Oil rose towards $101 a barrel on
Thursday, trading within sight of its record high, as the U.S.
dollar sank to a new low and after a supply cut in Nigeria,
Africa's top exporter.
Investors have pumped cash into commodities in recent weeks,
betting on signs the U.S. Federal Reserve will keep cutting
rates to prop up the economy. The dollar fell to a record low
versus the euro on Thursday.
"The energy complex is a dollar/inflation story as investors
have moved into commodities as a hedge against inflation," said
Nauman Barakat, senior vice president at Macquarie Futures USA.
"The ever-weakening dollar, upward inflationary pressures
and geopolitical tensions are having a greater impact on the
market than the fundamentals."
U.S. crude <CLc1> rose $1.31 to $100.95 a barrel by 1500
GMT, having hit a record high of $102.08 on Wednesday. London
Brent crude <LCOc1> gained $1.24 to $99.53.
Also boosting prices, output at Nigeria's Brass River crude
oil stream was cut by 20,000 barrels per day this week due to
sabotage on a pipeline, Italian oil firm Agip <ENI.MI> said. The
leak was fixed on Wednesday.
The setback at Brass River comes on top of about 515,000 bpd
of supply shut down in Nigeria. Earlier, oil traders said the
Brass River output loss was between 50,000 bpd and 80,000 bpd.
Pressuring the dollar, U.S. fourth quarter gross domestic
product was revised lower and a surprisingly big jump in initial
weekly jobless claims added to concern about the economy.
OPEC
Expectations that the Organization of the Petroleum
Exporting Countries will not raise production at its meeting on
March 5 also supported oil's decline, as did winter fuel demand
in the United States and Europe.
OPEC's president, Chakib Khelil of Algeria, said on Tuesday
members would not raise output, in part because of concern about
a demand slowdown.
Analysts who use past price movements to predict future
direction said a move a few dollars higher for U.S. crude, also
known as WTI, could lead to further gains.
"With the dollar in freefall, we would be concerned that if
WTI rallies above $102-$103 it would trigger a further surge
towards $110-$115," Barclays Capital technical analysts said in
a report.
"For the time being, we are hopeful that $102-$103 will
continue to cap and dip back towards $99, or even $97, before a
more important test of the upside occurs."
Oil fell earlier on Thursday as bulging stockpiles in the
United States added to concern over its economy. U.S. crude
stocks rose last week for a seventh week, a government report
showed on Wednesday.
"In terms of fundamentals, it's hard to justify the ferocity
of the market's rally," said Robert Laughlin of MF Global. "The
weakness in the U.S. economy is now affecting demand."
(Reporting by Alex Lawler and Felicia Loo, editing by James
Jukwey)
