Oil prices rose to near $100 a barrel Friday as Germany and France posted strong economic growth figures and the U.S. dollar weakened, making crude cheaper for investors with other currencies.
By early afternoon in Europe, benchmark crude for June delivery was up 93 cents to $99.90 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained 76 cents to settle at $98.97 on Thursday.
In London, Brent crude for June delivery was up $1.20 to $114.18 a barrel on the ICE Futures exchange.
Crude prices have zigzagged near $100 for most of this week, broadly tracking the value of the dollar.
When the dollar weakens -as it has most of this year- oil tends to rise while it usually falls when the dollar is stronger.
"Stronger than expected GDP data from Germany, France and the eurozone provided some support to the euro and pushed the U.S. dollar lower," said a report from Sucden Financial in London. "The oil market seems very vulnerable, but is likely to be erratic amid these uncertain economic conditions in the eurozone."
Germany, Europe's biggest economy, grew by 1.5 percent in the first quarter of 2011, above economists' forecasts for 1 percent growth. France, the eurozone's second-biggest economy, grew 1 percent on higher consumer spending and business investment.
Those figures helped boost the euro, which rose to $1.4284 from $1.4241 late Thursday, while the dollar fell to 80.63 yen from 81.00. "Oil is maintaining a tight correlation with the dollar for now," Ritterbusch and Associates said in a report.
"Given some expected wide swings in the currencies ...exceptional oil price volatility will likely remain intact through this month." Traders are also closely watching for signs higher fuel costs are crimping U.S. crude demand. The International Energy Agency on Thursday cut its estimate for global demand this year by 190,000 barrels per day, noting that higher gasoline prices in the U.S. appeared to be forcing Americans to cut back on driving.
Some analysts expect demand in developing economies to bolster global consumption. "Overall, the global demand picture has not changed significantly," Barclays Capital said.
In other Nymex trading in June contracts, heating oil added 2.83 cents to $2.942 a gallon and gasoline gained 2.14 cents to $3.0853 a gallon. Natural gas futures retreated 2.4 cents to $4.17 per 1,000 cubic feet.