NEW YORK, Feb 26: Oil surged over $101 a barrel on Tuesday to within pennies of a record as investors reacted to weakness in the US dollar following a batch of gloomy economic data.

Strong heating fuel demand in Europe and the United States in the midst of a cold spell and signals from Opec that the group will not raise production at its meeting next week added support to crude’s rally, dealers said.

US crude gained $1.76 to $101.11 a barrel by 1730 GMT, bringing it 21 cents below last week’s all-time high. London Brent crude rose $1.98 to a record for the European benchmark of $99.67.

“The weak dollar seems to be the biggest catalyst for this boost,” said Mark Waggoner, president of Excel Futures Inc in Huntington Beach, California.

A weak dollar can lead traders to push up nominal prices for commodities denominated in the currency as a way of preserving value in other currencies.

While a weak dollar can sometimes trigger commodities buying, worries about an economic slowdown have also tempered oil’s rally in recent weeks by dimming the outlook for global energy demand.

Oil’s gains added to a 42-cent rise on Monday that was led by heating fuels as cold weather hit parts of Europe and seasonal temperatures lingered over the northern US states following a mild start to winter.

Oil prices hit a record $101.32 a barrel last week.—Reuters