The price of oil climbed, reversing earlier falls, on the back of the weakening dollar.

US light sweet crude added $1.16 to 114.03 a barrel, while in London, Brent crude added 99 cents to $112.93.

The dollar weakened against the euro after official US data showed inflation was quickening, helping push up oil and other commodities such as gold.

Investors tend to buy commodities as the greenback weakens because it makes such investments relatively cheaper.

Earlier in the day, oil had fallen below $112 a barrel after Tropical Storm Fay avoided oil operations in the Gulf of Mexico.

Other commodities to rise on Tuesday included nickel, used largely for making steel, which climbed 7.3% to end at $19,395 a tonne.

“The market is going to be fairly close to balance rather than being oversupplied, and there is the prospect that the stainless steel market will recover in the next few months on a year-on-year basis,” said Dan Smith, analyst at Standard Chartered.

And copper for delivery next month added 12 cents to $3.4350 per lb in New York.

Commodities are seen as safe investment when inflation pressures are increasing.

Future falls?

Though oil prices have risen, they are far from the record of more than $147 a barrel reached in July.

And analysts are predicting that oil could fall given the current economic slowdown dents demand.

US figures due out on Wednesday expected to show a rise in stockpiles, underlining the decline in demand.

Meanwhile last week’s figures from Opec hinted that global demand for oil is set to slow.

The oil cartel’s monthly report predicted global oil demand would grow by one million barrels a day in 2009 – 30,000 barrels lower than its previous forecasts, and its lowest growth since 2002.

But current geopolitical tensions in Georgia, where Russian troops are pulling out of the region, and in Pakistan, following President Pervez Musharraf’s resignation, are likely to support prices, experts added.

News reported by The BBC