Oil hovers above $100 on weaker U.S. dollar

Oil prices hovered above $101 a barrel Friday as the boost from a weaker dollar struggled to offset worries of tepid U.S. economic growth.

By early afternoon in Europe, benchmark oil for July delivery was up 16 cents to $100.39 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.09 to settle at $100.23 on Thursday.

In London, Brent crude for July delivery was up 10 cents at $115.15 a barrel on the ICE Futures exchange.

The euro rose to $1.4238 on Friday from $1.4135 late Thursday while the dollar fell to 81.09 yen from 81.37 yen. A weaker U.S. currency makes dollar-based commodities such as oil cheaper for investors with other currencies.

"Currency movements will continue to be the key market drivers, amid these tentative economic conditions," said a report from Sucden Financial in London, mentioning the "fairly disappointing economic data" from the United States and the eurozone, uncertainty about a potential debt restructure in Greece and weaker oil demand from the world's largest economies.

The Commerce Department confirmed Thursday that the U.S. economy grew at a lackluster annual rate of 1.8 percent in the first quarter as high gasoline prices weighed on consumer spending. Also, the Labor Department reported that more people applied for unemployment benefits last week.

Some analysts expect that falling crude demand will drag oil prices down over the next few months.

"A weaker dollar could bolster buying interest in oil as an asset class," Ritterbusch and Associates said in a report. "But our view is that demand destruction will win out over the currency factor into the summer period."

In other Nymex trading in June contracts, heating oil rose 0.01 cent to $2.983 a gallon and gasoline added 0.51 cent to $3.0534 a gallon. Natural gas futures for July delivery gained 2.6 cents to $4.386 per 1,000 cubic feet.