May 5, 2008 / 3:34 PM / 11 years ago

NYMEX crude hits record $120 on weak dollar, Iran

NEW YORK, May 5 (Reuters) - U.S. crude oil futures rose more than $3 a barrel to a record over $120 on Monday as weakness in the dollar and renewed tensions with Iran spurred buying.

At 11:11 EDT (1511 GMT) US crude oil futures CLc1 gained $3.89 at $120.21 a barrel, an all-time peak.

Lighter-than-normal trading volumes due to holidays in Britain were expected to lead to a more volatile trading day, analysts said.

The U.S. dollar was down 0.28 percent against a basket of other major currencies =USD in early trading on Monday as investors reevaluated U.S. jobless data released on Friday.

“We’re seeing a weakening in the dollar and Friday’s unemployment data reinforces the point that we may not have too much demand deterioration. That’s got people putting money back into this market,” said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois. “We could get up to $122 as an upside target this week.”

Oil prices have risen nearly six-fold since 2002, propelled higher by surging demand from China and other developing economies.

Adding support to crude oil was Iran’s announcement on Monday it would not consider any incentives offered by world powers that would constrain its right to nuclear technology.

Six world powers agreed on Friday to offer a new package of incentives to Iran to encourage it to halt the enrichment of uranium. [ID:nHAF530338]

Ongoing oil production disruptions in Nigeria, where militants over the weekend attacked installations operated by Royal Dutch Shell Plc (RDSa.L), also continued to underpin oil prices.

Shell said Saturday it had been forced to shut down an unspecified amount of oil production after a fresh assault by rebel groups. Security sources said three oil wells had been blown up in the attack. [ID:nL03347126]

RBOB gasoline futures RBc1 rose 7.82 cents to $3.0446 a gallon, trading from $2.9278 to $3.0503. Heating oil futures HOc1 rose 9.23 cents to $3.3110 a gallon, trading from $3.2025 to $3.3222. (editing by Jim Marshall; Editing by David Gregorio)

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