Oil prices reach new high for 2009 near $73

NEW YORK -- Oil prices hit an eight-month high as the dollar fell, suggesting that consumers and businesses may be more willing and able to spend money on energy.

Benchmark crude for July delivery rose $1.22 to trade at $72.54 on the New York Mercantile Exchange. Oil prices climbed as high as $72.78 a barrel earlier in the day.

In London, Brent prices added 80 cents to fetch $71.60 a barrel on the ICE Futures exchange.

Crude prices rose sharply in the morning after the federal government announced a drop in first-time jobless claims last week. Another report said retail sales grew in May for the first time in three months, in part because of spiking gasoline prices.

Prices at the pump began to rise quickly in May and have not stopped, hitting levels not seen since October on Thursday.

The International Energy Agency in Paris also said that the slump in global oil demand in 2009 would be slightly less severe than previously expected. The organization revised its demand estimate upward for the first time in 10 months.

The IEA said in its monthly survey that global oil demand would fall by 2.9% to 83.3 million barrels a day this year. In May, the IEA was expecting a 3% annual fall in demand, the sharpest rate of decline since 1981.

Oil markets have also seen a surge in money from investors who fear that massive fiscal stimulus spending could weaken the U.S. currency. The euro climbed to $1.4089 on Thursday from 1.3990 the previous day. Commodities can be used as a hedge against a falling dollar

At the pump, retail gas prices added a half cent overnight to a new national average of $2.632 a gallon. Gas is 38.4 cents a gallon more expensive than last month, but it's still a relative bargain compared with the same time last year, when a gallon of gas cost $1.42 more.

Meanwhile, the Energy Department's Energy Information Administration said natural gas stockpiles jumped last week. A large natural gas inventory is a sign that the country is using less energy as manufacturers and other industries shrink their operations.