NEW YORK (Dow Jones)--Crude oil is up Monday, taking its cue from a weaker dollar and supported by concerns over increased global tensions with Iran. Light, sweet crude for January delivery recently traded $1.97, or 2.5%, higher at $79.44 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded $2, or 2.6%, higher at $79.20 a barrel. A weaker dollar helped push oil prices higher, with expectations that interest rates will remain low in the U.S., prompting investors to seek out riskier and higher yielding assets, such as oil. Comments Sunday from Federal Reserve Bank of St. Louis President James Bullard that the U.S. may lag other central banks in removing the massive liquidity pumped into financial markets also weighed on the dollar. "The dollar is weaker and so we have an inverse relationship with oil there, plus U.S. stock markets are called higher, and that's why oil is up," said Tim Jennings of Vantage Trading in New York. Oil often rises when the dollar weakens as it makes the value of the commodity cheaper against other currencies. Jennings noted that increased global tensions with Iran, as it conducted military exercises over the weekend, also caused a flight of investors into commodities--including oil and gold--on concerns of perceived disruptions to oil supply from the Middle East Gulf. Iran launched a five-day air-defense exercise Sunday, exerting its military might amid continuing Western pressure to accept a nuclear-energy deal negotiated last month with the aid of the International Atomic Energy Agency, the Wall Street Journal reported. A swathe of macro-economic data from the U.S. this week could also have an impact on oil prices, if it boosts stock markets, said Jennings. Equity markets are being viewed as a proxy for increased future oil demand by some oil market participants, anticipating that any positive data bode well for a brighter economic outlook. The first important data set of U.S. existing home sales will be released Monday at 10 a.m. EST. Economists estimate sales will have risen by 2.3% to an annual rate of 5.7 million in October. The oil market will likely again target $80 a barrel, if the earlier upside momentum continues. But the market has so far been able to sustain a move above this level as worries over weak U.S. consumption and high stock levels persists. Valero Energy Corp. (VLO) last week announced the closure of its Delaware City refinery, becoming the latest casualty of slack U.S. product demand and poor refining profit margins. Front-month December reformulated gasoline blendstock, or RBOB, recently traded 4.94 cents, or 2.5%, higher at $2.0300 a gallon. December heating oil recently traded 5.39 cents, or 2.7%, higher at $2.0295 a gallon.

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