Oil Soars Above $132

Oil traded higher at more than $132 a barrel on Monday as the U.S. summer driving season kicked off, underscoring concerns that output was inadequate amid rising demand.

Tightness in the oil market has made prices sensitive to a confluence of factors, including a weak U.S. dollar, speculative funds, an unwillingness by oil producers to raise production and geopolitical tensions, analysts said.

In midday Asian trade, New York's main oil futures contract, light sweet crude for July delivery, was up 46 cents to $132.65 a barrel, after closing at $132.19 a barrel in New York on Friday.

Electronic trading on the New York Mercantile Exchange was unaffected by the U.S. Memorial Day holiday on Monday.

The U.S. summer driving season, which
kicked off at the weekend, is a time when Americans take to the roads on their vacations, boosting fuel demand in the world's biggest economy and affecting global prices.

London's Brent North Sea crude for July delivery was trading at $131.90 a barrel, up 33 cents.

On Thursday, Brent struck an all-time high of $135.14 and New York crude reached a record $135.09, before both contracts plunged as investors banked profits.

Mark Pervan, senior commodities strategist at ANZ Bank, said buying ahead of the reopening for floor trading in New York on Tuesday pushed prices higher on Monday.

Expectations the dollar will continue to struggle has also made the market more attractive because a weak U.S. currency makes dollar-commodities such as oil cheaper for foreign buyers.

Investors were positioning on expectations the U.S. market will reopen strong on Tuesday, he said.

The dollar was on the back foot in Asian trade on Monday, pressured by worries that soaring oil prices could hinder a recovery in the U.S. economy, dealers said.

Investors were waiting for a batch of economic data due this week as well as speeches by Federal Reserve officials for fresh clues on the outlook for U.S. interest rates.

Crude futures have risen by more than a third since the beginning of 2008 when they struck $100 for the first time, lifted by unrest in some of the oil-producing countries, falling energy inventories, high Asian demand for fuel and a weak dollar.