Oil rises above $81, weak dollar supports

Oil rose above $81 a barrel on Monday, adding to last week's two percent rise fuelled by a weak dollar and geopolitical tensions in the Middle East.                                            
 

Analysts said the dollar, which is slipping towards a 15 year low against the yen and hit a three-month low against the euro on Friday, was overshadowing concerns about the slow pace of recovery in the United States.                                           

US crude for September delivery rose 74 cents to $81.44 a barrel by 1414 GMT, having earlier hit a high of $81.76 before easing slightly.                                           

The contract fell $1.31 or 1.6% to settle at $80.70 a barrel on Friday, but ended the week 2.2% higher.                                           

London Brent crude gained 61 cents to $80.76.                              

Prices closed above $80 a barrel last week for the first time since May, but some traders have cautioned they think prices will struggle to stay at this level.                                           
 

"There has been some optimism about the strength of Chinese demand but that has faded now," Bache Commodities broker Christopher Bellew said.                                           
 

"I'm not certain the price will be sustained for very long until we see much more convincing signs of economic recovery."                                            
The latest US employment figures on Friday showed the world's largest economy shed 131,000 jobs in July, more than double the drop forecast by the market.                                          
 

But some analysts said the weak US economy was providing a short-term fillip for prices as it is also depressing the value of the dollar, making dollar-priced commodities cheaper for holders of other currencies.