NEW YORK, Aug. 19 (Xinhua) -- Crude oil surged back above 116 U.S. dollars a barrel Tuesday after the dollar fell against the euro on a weaker U.S. economic report.

    Light, sweet crude for September delivery hit 116.65 dollars a barrel before retreating to 114.53 dollars a barrel, trading up 1.66 dollars, on the New York Mercantile Exchange.

    Crude opened lower as the Tropical Storm Fay missed oil operations in the Gulf of Mexico, easing concerns that oil supplies may get disrupted in the area.

    The rally in crude started after the dollar fell against the euro from its strongest point since February 20. The U.S. Labor Department reported Tuesday that the wholesale prices rose to the highest annual rate in 27 years. A lower dollar usually makes the commodities like crude and gold more appealing to investors as hedges against inflation. And it also makes crude more affordable to foreign buyers.

    Meanwhile, concerns that conflict in Georgia may disrupt the pipeline link between Europe and Asia still weighed on the market.

    In London, Brent crude for October delivery rose 1.31 dollars to settle at 113.25 dollars a barrel on the ICE Futures Exchange.