(Recasts, updates prices, market activity)
By Alex Lawler
LONDON, Feb 28 (Reuters) - Oil rose towards $102 a barrel
on Thursday, trading within sight of its record high, as the
U.S. dollar sank to a new low and after militant attacks cut
supply from Nigeria, Africa's top exporter.
Investors have pumped cash into commodities in recent
weeks, betting on signs that 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 $2.25 to $101.88 a barrel by 1610
GMT, having hit a record $102.08 on Wednesday. London Brent
crude <LCOc1> gained $1.78 to $100.05.
U.S. crude is nearing the inflation-adjusted high of
$102.53 hit in 1980, according to data from the International
Energy Agency in Paris.
The U.S. dollar dropped to an all-time low versus the euro
after U.S. fourth-quarter gross domestic product was revised
lower and a report showed a surprisingly big jump in initial
weekly jobless claims.
Prices of dollar-denominated commodities tend to rise when
the currency weakens.
Also boosting prices, output at Nigeria's Brass River crude
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 and output restored.
The setback at Brass River comes on top of about 515,000
bpd of supply shut down in Nigeria.
OPEC
Expectations that the Organization of the Petroleum
Exporting Countries will not raise output at its meeting on
March 5 also supported oil, as did winter fuel demand in the
United States and Europe.
OPEC most likely will decide at next week's meeting to keep
its oil output steady, the head of Libya's OPEC delegation,
Shokri Ghanem, said on Thursday.
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 early in the session due to bulging fuel stocks in
the United States. 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."
(Additional reporting by Richard Valdmanis in New York;
Editing by David Gregorio)
