OIL PRICES rose about 1.5 per cent yesterday as part of a broad commodities rebound triggered by weakness in the dollar.

US crude gained $1.66, or 1.47 per cent, to settle at $114.53 a barrel, while London Brent crude rose $1.31 to $113.25 a barrel.

"On crude, trend-line support is holding and the dollar is exhausted and falling," said Mark Waggoner, president of Excel Futures in California.

Gold and other commodities also pushed higher. A weak dollar helps boost commodities prices by raising the purchasing power of buyers using other currencies.

The dollar index dropped 0.4 per cent yesterday in its worst one-day fall since mid-July.

Crude's gains reversed losses earlier in the day as tropical storm Fay spared offshore oil rigs in the Gulf of Mexico.

Oil prices are down more than 20 per cent since the July 11th peak over $147 a barrel, pulled lower by concerns over a global slowdown in energy demand.

Venezuela's oil minister said yesterday the Opec-member nation could recommend the cartel cut production if oil prices keep falling. Despite the losses, crude remains up about 15 per cent so far this year and nearly six-fold since 2002 in a rally sparked by rapid economic growth in China.

Dealers said the next key indicator would be US oil inventory data from the Energy Information Administration today.

Analysts expect the data to show an 800,000 barrel increase in US crude oil inventories as imports delayed by recent storms rebounded. - (Reuters)