Dollar falls; oil, gasoline prices rise

Associated Press
Posted: April 21, 2011

NEW YORK - Oil settled above $111 per barrel yesterday as the dollar weakened and the government reported an unexpected drop in U.S. crude supplies.

Gas- pump prices also edged higher to $3.84 for a gallon of regular - up almost a dollar over last year..

Benchmark West Texas Intermediate oil for June delivery gained $3.17 to settle at $111.45 per barrel on the New York Mercantile Exchange. Oil has increased 20 percent since the beginning of the year as investors anticipated rising global demand and unrest the Middle East.

Oil rose yesterday as the dollar lost ground to the euro, the British pound and other major currencies. The dollar has been sliding since Standard & Poor's downgraded its outlook for U.S. debt earlier this week. Oil, which is priced in dollars, tends to rise as the dollar falls. That makes crude contracts cheaper for investors holding foreign currency.

The Energy Information Administration reported that U.S. oil supplies unexpectedly shrank by 2.3 million barrels last week. Analysts expected an increase of 1.6 million barrels.

EIA data shows that gasoline demand has dropped for the past three weeks, when compared with levels from a year ago.

Gasoline-pump prices keep rising nevertheless. The national average increased slightly yesterday to $3.837 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is 28.8 cents higher than it was a month ago and 97.8 cents higher than a year ago.

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