By Mark Shenk
April 17 (Bloomberg) -- Crude oil retreated from a record after the dollar increased from an all-time low against the euro, reducing the appeal of commodities.
Oil touched $115.54 before the dollar rebounded. The U.S. currency gained after failing to weaken beyond $1.60 and Luxembourg Finance Minister Jean-Claude Juncker said the euro's rise isn't desirable. The dollar's drop has increased the flow of money into commodities.
``The dollar-oil relationship is very much in evidence,'' said Jim Ritterbusch, president of Galena, Illinois-based energy consulting firm Ritterbusch & Associates. ``As long as there is no evidence that dollar will recover some of its lost ground there will be upside potential in the energy markets.''
Crude oil for May delivery fell 7 cents to settle at $114.86 a barrel at 2:43 p.m. on the New York Mercantile Exchange. Prices are up 4.3 percent this week.
Brent crude for June settlement declined 23 cents to settle at $112.43 a barrel on London's ICE Futures Europe exchange. The contract touched a record $113.38 today.
``Oil backed off on Juncker's comments but the trend remains higher,'' said Tom Bentz, a broker at BNP Paribas in New York. ``Every day we get higher highs and higher lows. We won't be able to think about a correction until we can break below a previous day's low.''
The dollar increased 0.4 percent to $1.5879 per euro in New York, from $1.5947 yesterday. It touched the all-time low today of $1.5983.
Investors looking for higher returns have flocked to commodities. Oil in New York surged 82 percent over the past year as the Standard & Poor's 500 Index dropped 7.2 percent and the Dow Jones Industrial Average declined 1.1 percent.
`Commodity Bubble'
``You have a generalized commodity bubble due to commodities having become an asset class that institutions use to an increasing extent,'' George Soros said today at an event sponsored by the Centre for European Policy Studies in Brussels. ``On top of that you have specific factors that create the relative shortage of oil and, now, also food.''
Soros earned an estimated $2.9 billion last year, ranking second after John Paulson, founder of New York-based Paulson & Co., according to Institutional Investor's Alpha Magazine.
Boone Pickens, a billionaire energy investor, said he reversed course and adopted a long position on oil, meaning he is betting the price of crude will rise.
World oil supplies won't exceed 85 million barrels a day because of high depletion rates of existing wells, Pickens, the founder and chairman of Dallas-based BP Capital LLC, said today in a speech at Georgetown University.
``There is only 85 million barrels of oil globally in the market coming a day and I don't think you can increase that 85 million,'' Pickens said.
Falling Inventories
The Energy Department yesterday reported an unexpected decline in U.S. crude-oil inventories and refinery operating rates last week. The report also showed a bigger-than-expected drop in gasoline supplies.
U.S. refineries operated at 81.4 percent of capacity, the lowest since October 2005 when output was cut by hurricanes Katrina and Rita. Lower margins, or the profitability of refining, reduced the incentive for refiners to process crude oil into gasoline and other fuels.
``Gasoline is showing strength independent of the rest of the complex this week,'' Ritterbusch said. ``The exceptionally low level of refinery activity is going to continue to bolster gasoline prices.''
Gasoline for May delivery rose 1.88 cents, or 0.6 percent, to $2.9578 a gallon in New York, a record settlement prices. Futures touched $2.9749 today, an intraday record.
U.S. pump prices are following futures higher. Regular gasoline, averaged nationwide, rose 1.9 cents to a record $3.418 a gallon, AAA, the nation's largest motorist organization, said today on its Web site.
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