May 23 (Bloomberg) -- Crude oil rose more than $1 a barrel as the dollar fell against the euro, prompting investors to buy commodities as a hedge against the currency's decline.

The weakening dollar and higher global demand for raw materials have led to records this year for commodities including gold, corn, soybeans and rice. The dollar had the biggest weekly decline against the euro since the week ended March 28 as the U.S. housing slump and record oil prices slowed growth.

``Oil and the dollar have had an inverse relationship and it looks like the dollar may be heading for another record low against the euro,'' said John Kilduff, vice president of risk management at MF Global Ltd. in New York.

Crude oil for July delivery rose $1.38, or 1.1 percent, to settle at $132.19 a barrel at 2:51 p.m. on the New York Mercantile Exchange. The contract rose 4.9 percent this week. Futures reached $135.09 yesterday, the highest since trading began in 1983. Prices have doubled over the past year.

There will be no floor trading in New York on May 26 because of the Memorial Day holiday.

``With the myriad of issues hitting the market you are going to see a lot of buying ahead of the long weekend,'' Kilduff said.

The correlation coefficient between oil prices and changes in the euro has been 0.95 for the past year, indicating they have moved in the same direction 95 percent of the time.

Crude-oil prices touched a record yesterday, before closing lower, spurred by concern supplies may not be adequate. The International Energy Agency said it may cut long-term forecasts as fields deplete faster than expected. The price decline at the end of the day occurred as some traders said this month's 17 percent rally wasn't justified by U.S. stockpiles and demand.

`Shallow Corrections'

``Commodity rallies typically have shallow corrections,'' said Veronique Lashinski, a technical analyst at Newedge USA LLC in Chicago. ``When there's such crowd enthusiasm, a little move lower attracts people who look to buy at a cheaper price.''

Banks have increased their price forecasts because of supply constraints and demand growth. OPEC ministers said the group is powerless to stop the surge in prices.

Members of the Organization of Petroleum Exporting Countries, excluding Angola and Ecuador, exported 22.762 million barrels a day on tankers in the four weeks ended May 4, according to Lloyd's Marine Intelligence Unit. That compares with 23.786 million barrels a day in the equivalent period to April 6, data from the London-based tanker-tracking service showed.

The decline in exports preceded plans by Saudi Arabia, OPEC's largest producer, to raise output by 300,000 barrels a day in June, announced by Oil Minister Ali Al-Naimi on May 16.

Brent crude oil for July settlement rose $1.06, or 0.8 percent, to settle at $131.57 a barrel on London's ICE Futures Europe exchange. The contract touched a record $135.14 yesterday.

Oil May Rise

Crude oil may rise next week, a Bloomberg News survey showed. This is the first time in 20 weeks that analysts forecast an increase in prices.

Fourteen of 29 analysts surveyed by Bloomberg News, or 48 percent, said prices will rise through May 30. Twelve of the respondents, or 41 percent, said oil will fall and three forecast little change. Last week, 47 percent said futures would decline.

U.S. motorists, who are paying record prices for gasoline, drove 4.3 percent less in March for the biggest monthly drop ever, the Federal Highway Administration said. The decline in vehicle miles traveled was the first for March since 1979, the agency said today in a statement released in Washington.

Driving Season

The peak U.S. gasoline consumption period lasts from this weekend's Memorial Day holiday until Labor Day in early September, as Americans take to the highways for vacations.

Almost 31.7 million Americans will journey at least 50 miles from home by automobile from today through May 26, 1 percent less than a year ago, according to a report released by the AAA, the largest U.S. motorist group, on May 15.

Gasoline futures for June delivery rose 6.63 cents, or 2 percent, to settle at $3.396 a gallon in New York. Prices touched a record $3.438 yesterday.

U.S. pump prices are following futures higher. Regular gasoline, averaged nationwide, rose 4.4 cents to a record $3.875 a gallon, AAA said today on its Web site.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

Last Updated: May 23, 2008 17:07 EDT