Gas hits $3.60 a gallon, crude nears $120 on supply outages

"A quarter point cut could suggest ... we're getting to a point where the dollar might bottom out," Lynch said.

An unexpectedly large cut, or a suggestion that rates might be cut further, however, could fuel oil to new heights.

Meanwhile, Monday, labor actions that cut crude supplies from the North Sea and Nigeria supported prices. BP PLC on Sunday shut down the Forties Pipeline System that carries more than 700,000 barrels of oil a day to the U.K. because of a 48-hour walkout by employees at a refinery in central Scotland.

"With the refinery being shut down, it will affect supplies from the North Sea, and that has a potentially significant impact," said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney. "That comes at the same time that there's production disruptions from Nigeria, so the combined effect of those is the immediate factor that's put pressure on oil prices."

In Nigeria, workers at an ExxonMobil Corp. joint venture cut production by an unspecified amount to demand more pay. Militant attacks on oil infrastructure have also cut production of Nigeria's light, sweet crude, which is easily refined. After years of attacks, Nigeria's output is dropping and the country can produce only about 75 percent of its official capacity of 2.5 million barrels per day.

In other Nymex trading Monday, May gasoline futures fell 1.01 cent to $3.0436 a gallon, while May heating oil futures rose 0.66 cent to $3.3094 a gallon. May natural gas futures rose 20.5 cents to $11.168 per 1,000 cubic feet.

In London, Brent crude futures rose 63 cents to $116.97 a barrel on the ICE Futures exchange.

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Associated Press writers George Jahn in Vienna, Gillian Wong in Singapore and Jamey Keaten in Paris contributed to this report.