Heating oil advanced to the highest level in more than two years as colder weather was forecast for the U.S. Northeast and as a weaker dollar increased the investment appeal of commodities.

Futures rose as the National Weather Service’s Climate Prediction Center projected that temperatures from the U.S. Midwest to the Northeast will be lower than normal from Dec. 8 through Dec. 16. The dollar fell 1.3 percent versus the euro as of 1:12 p.m. in New York.

“The forecast for cold weather seems to have motivated the move into the distillate markets,” said Tom Knight, vice president of trading and supply at Truman Arnold Cos. in Texarkana, Texas.

Heating oil for January delivery advanced 3.86 cents, or 1.6 percent, to $2.4932 a gallon at 1:12 p.m. on the New York Mercantile Exchange. Prices touched $2.4972, the highest intraday level since Oct. 8, 2008. The contract was heading toward a weekly gain of 6.9 percent.

The heating oil crack spread, based on January contracts, gained 55 cents to $15.64 a barrel. That’s the widest premium for the fuel over crude in more than two months.

The dollar fell as U.S. companies added fewer jobs than forecast in November and the jobless rate rose, indicating the economic recovery may be faltering.

Heating oil’s third consecutive price gain is “about the weather and the dollar is getting crushed,” said Phil Flynn, vice president of research at PFGBest in Chicago.

Jobless Rate

The Labor Department reported today that the jobless rate rose to 9.8, the highest since April, from 9.6 percent in October. Payrolls increased by 39,000, less than the 150,000 rise projected by economists surveyed by Bloomberg News.

Private payrolls, excluding government agencies, also expanded less than forecast, adding 50,000 in November. Economists projected a 160,000 gain, the survey showed.

Gasoline for January delivery rose 0.37 cent to $2.359 a gallon and the contract was heading toward a weekly gain of 9.3 percent. The January crack spread narrowed 86 cents to $10.06 a barrel.

“Refiners are selling the crack spread, probably locking in some margins,” said Tom Knight, vice president of trading and supply at Truman Arnold Cos. in Texarkana, Texas.

Regular gasoline at the pump, averaged nationwide, rose 2.1 cents to $2.90 a gallon yesterday, AAA said on its website.