Oil prices pushed higher on Friday, posting an eighth straight month of gains as the weaker dollar and turmoil in North Africa and the Middle East offset concerns about fuel demand and slowing US economic growth. For US crude, the streak of monthly gains was the longest since the contract was introduced by the New York Mercantile Exchange in 1983, according to Reuters data.
Expectation's the US Federal Reserve will maintain a loose monetary policy following this week's meeting has helped to fuel oil's rise, weakening the dollar and pushing investors into riskier assets such as commodities. Refinery problems ahead of the US summer driving season have added further support to US gasoline futures, which 33-month highs on Friday, settling at $3.46 a gallon and just 5 percent below all time record highs.
Brent crude for June rose 87 cents to settle at $125.89 a barrel, gaining 7.3 percent for the month, touching a 2011 high of $127.02 on April 11. US crude for June settled up $1.07 at $113.93 a barrel after touching $114.18 earlier, the highest intraday price since prices reached $130 on September 22, 2008. US crude rose 6.8 percent for April.
Both US and Brent crude bounced from early dips after eurozone data showed the inflation rate rose further above the European Central Bank's target in April, helping push the dollar index against a basket of major currencies to a three-year low. Thursday's report that growth in the US gross domestic product slowed more than expected in the first quarter reinforced the perception that the US central bank will continue with its loose monetary policy.
"Yesterday's three-year lows in the dollar index following the mid-week Fed statement strongly suggests a market dynamic that is not yet ready to reverse," Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois, said in a note. "Consequently, oil will continue to be valued as an asset class or inflation hedge along with other commodities such as the gold market."
Crude oil trading volumes remained tepid, dampened by a holiday in the United Kingdom. Volatility and uncertainty due to the pan-Arab protests and Libya's conflict have tempered trading. The US 30-day average volume is down by nearly 130,000 lots compared with the 250-day average, according to Reuters data. Libya's conflict spilled beyond its borders as forces loyal to leader Muammar Gaddafi attacked the Tunisian town of Dehiba, near the Libyan border.
Morocco, which borders oil and gas producer and Opec-member Algeria, said a bomb that killed at least 14 people on Thursday was a terrorist act. In the Middle East, tensions escalated in Syria and tens of thousands rallied across the country demanding political freedoms. Oil's price rise could be tempered if evidence that high prices are eroding demand starts to confirm forecasters' fears that they are slowing consumption and the global economy. US consumer spending rose as households stretched to cover the higher cost for food and gasoline as inflation posted its biggest year-on-year rise in 10 months.