Oil climbs to $115 a barrel on lower dollar

Oil prices extended gains to $115 a barrel on Wednesday, after a lower U.S. dollar rekindled buying in oil and other commodities.
U.S. crude climbed 47 cents to $115 a barrel at 0823 GMT, rising for a second day, after prices had slid about 22 percent from the record peak of $147.27 a barrel in mid-July.
London Brent crude rose 34 cents to $113.59 a barrel.
"There could be further upside, but it will not be that much because of the poor economic outlook (in the West)," said Gerard Rigby of Fuel First Consulting in Sydney.
The dollar steadied on Wednesday, but was off a seven-month high as concerns about the U.S. financial system weighed on sentiment for the greenback.
Eyes were also on the upcoming weekly U.S. oil products data to be released by the Energy Information Administration later on Wednesday.
On average, the expanded poll called for a 800,000-barrel increase in crude stocks, while gasoline stocks were forecast to show a 2.7 million-barrel fall, down for the fourth-straight week.
Prices are unlikely to go below $100 a barrel in the short term because robust demand for crude oil in China and India will help offset bearish sentiment in the West, Rigby said.
However, Chinese demand for diesel and gasoline is set to fall from its surge in recent months ahead of the Olympics. PetroChina and Sinopec Corp will halt diesel imports next month, having bought more than half a million tonnes for for August.
OPEC-member Venezuela will be proposing an oil production cut at the next meeting of the oil cartel in September if prices continue to fall, energy minister Rafael Ramirez told Reuters on Tuesday.
"That is why we won't see prices falling below $112 a barrel," Rigby said.
Political upheaval in producer countries and the threat of bad weather in the Gulf of Mexico would continue to underpin crude markets.
Unrest in Nigeria would cushion any dramatic fall in prices, as the deteriorating security situation in the Niger Delta has shut a fifth of its 2 million barrels per day (bpd) oil capacity.
Worries over supplies also came after StatoilHydro said it discovered a small gas leak in a pipeline between the Kvitebjoern platform in the North Sea and the onshore Kollsnes gas processing facility, which will reduce oil production. But gas customers will not be affected by the leakage, it added.