Oil advances to $79

World oil prices rose on Tuesday to strike 79 dollars per barrel but traders said the strong dollar would likely keep a lid on the crude market.

New York's main futures contract, light sweet crude for April delivery, won 30 cents to 79.00 dollars per barrel.

It had hit an intra-day high of 80.62 dollars on Monday, the highest level since mid-January.

Elsewhere on Tuesday, London's Brent North Sea crude for April was up 43 cents at 77.32 dollars a barrel.

"This week is very busy data-wise and volatility is likely to remain elevated, while the market continues to track the euro/dollar rate," said VTB Capital analyst Andrey Kryuchenkov.

In foreign exchange trade, the euro slumped to its lowest level in more than nine months against the dollar on Tuesday as the shared eurozone currency was plagued by concerns about the Greek debt crisis.

A stronger greenback usually hurts demand for dollar-priced oil because it becomes more expensive for buyers using weaker currencies.

In London morning deals, the European single currency tumbled to 1.3436 dollars, reaching a level last seen on May 18, 2009. It later recovered slightly to 1.3495 dollars, down from 1.3556 in New York late on Monday.

A warning by the European Union's financial official Olli Rehn that Greece must act fast and step up measures to slash its public deficit ahead of a key deadline in two weeks soured investor sentiment towards the euro, dealers said.

Concerns that debt problems in Greece will spread to the rest of the eurozone have been weighing on the single currency.

On Monday, crude oil retreated on the back of the strong dollar and disappointing US manufacturing data, after surging to the highest level in 18 months following last week's better-than-expected US economic growth numbers.

The rebounding US manufacturing sector grew for the seventh consecutive month in February but at a slower clip than expected, according to a industry survey published Monday.

The Institute for Supply Management said its manufacturing index, also known as the purchasing managers index, slowed to 56.5 percent in February, from 58.4 percent in January. Any number above 50 percent indicates growth.

The figure was slightly lower than the 58.0 percent expected by most market watchers.

"Oil pulled back from the 80-dollar level as traders mulled over mixed signals over the strength of the US economy," said ODL analyst Marius Paun.

"Yesterday's manufacturing numbers showed output rose for a seventh straight month, albeit it fell short of expectations."

Meanwhile on Wednesday, the US Department of Energy will release its weekly inventories report, which will be closely-watched for clues on demand in the world's largest energy consumer.