Oil prices were back above $79 a barrel today as the dollar fell against the euro and the Japanese yen, supporting oil after three straight days of declines.

By midday in Europe, benchmark crude for December delivery was up 54 cents to $79.22 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.82 to settle at $78.68 on Monday.

Crude jumped to a 12-month high at $82 a barrel last week as the dollar weakened amid concerns massive global stimulus spending will eventually spark inflation. Since oil is priced in dollars, a drop in the U.S. currency makes oil prices rise.

The euro touched a 14-month high of $1.5061 on Monday before closing at $1.4861. Today, the euro strengthened to $1.4890, while the dollar fell to 91.92 Japanese yen from 92.21 yen.

"The combination of surging money supply, a rapidly weakening dollar and a cyclical improvement in oil demand could push oil prices above $100," Bank of America Merrill Lynch said in a report.

Some economists, such as Jorg Zeuner of Liechtenstein-based VP Bank, expect the dollar and oil to stabilize over the next three to six months as inflation fears ease.