* Libya stalemate supports oil prices
* Investors worry about supply ahead of Nigerian elections
* Coming up: API oil inventory data, 4:30 p.m. EDT Tuesday
(Recasts, updates prices and market activity)
By Robert Gibbons
NEW YORK, April 8 (Reuters) - Oil prices surged the most in
three weeks on Friday, with Brent jumping $4 a barrel to a
32-month high as a sinking dollar triggered a fresh rush of
fund buying across the commodities spectrum.
U.S. crude topped $113 but trailed Brent, which closed out
its best weekly gain since February. Deepening violence in
Libya and concerns about unrest in Saudi Arabia and Nigeria
lent new impetus to a rally that is threatening to crimp global
growth and add to growing inflation concerns.
Analysts said Friday's sharp gains in oil, wheat, copper
and gold -- while stocks slipped -- stemmed from a big wave of
second-quarter investment. Oil drew extra support from fears
that the war in Libya was starting to inflict lasting damage on
the oil sector.
"Troubles in Libya mean Gaddafi has caused damage to the
Sirte basin, which has about two-thirds of their oil. There's
dollar weakness and some very large fund action piling into the
market in oil and base metals," said Rob Montefusco, an oil
trader at Sucden Financial.
ICE Brent crude for May <LCOc1> rose $3.98 to settle at
$126.65 a barrel, highest settlement since July 2008. It
reached $126.91 in post-settlement trading.
U.S. crude <CLc1> rose $2.49 to settle at $112.79. It
reached $113.20 post-settlement, the highest intraday price
since September 2008.
DOLLAR WEAKENS
The dollar index <.DXY> measuring the greenback against a
basket of currencies weakened as the euro jumped to a 15-month
peak against the dollar following the European Central Bank's
interest rate hike. []
A weaker dollar often lifts dollar-denominated commodities
because they become attractive as a hard-asset inflation hedge
and demand can be stoked by cheaper prices for consumers using
other currencies.
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Three-month technical views on 28 commodities:
http://link.reuters.com/pyx78r
Rising oil prices good for equities once again:
http://r.reuters.com/zyt88r
Reuters Insider Special - Doomsday Scenarios for Oil:
http://link.reuters.com/ner88r
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"New investment flows at the start of the quarter are
driving oil and gold this morning, with the strong rise over
the past week attracting trend followers and more fund money,"
said Michael Guido, director of hedge fund energy sales at
Macquarie Bank in New York.
"The uptrend is still very much intact, with key technical
levels being taken out."
Brent's 14-day Relative Strength Index, a technicians'
measure to gauge whether a contract is overbought or oversold,
approached 80 -- a level only hit three times before and never
surpassed, according to Reuters data. []
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For technical chart click: http://link.reuters.com/juw88r
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U.S. gasoline <RBc1> and heating oil <HOc1> futures and ICE
gas oil futures [] all posted strong performances
as crude surged.
U.S. crude trading volumes above 600,000 lots neared the
30-day average, rebounding from late March when activity hit
the lowest this year.
AFRICA/MIDDLE EAST TURMOIL
In addition to the Libyan conflict, investors eyed protests
in top oil exporter Saudi Arabia and unrest in Syria, Yemen and
attacks intended to interfere with elections in OPEC-member
Nigeria, which produces 1.9 million barrels per day of oil.
[] []
Libya's civil war has cut the normal output of 1.6 million
barrels per day (bpd) by 80 percent to between 250,000 and
300,000 bpd, according to a senior government official.
NATO leaders have acknowledged the limits of their air
power, with analysts predicting a drawn-out conflict.
[] []
(Additional reporting by Gene Ramos and David Sheppard in New
York, Nia Williams in London and Randy Fabi and Alejandro
Barbajosa in Singapore; Editing by David Gregorio)
