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U.S. crude for October delivery rose $5.66 to $121.22 a barrel, having reached as high as $122.02. Wednesday’s $114.98 settlement price ended active trading for the September contract.

The last time oil traded above $120 was Aug. 8, when it touched $120.08. Oil settled at $120.02 on Aug. 7.

“The investor class is buying back oil as a hedge because the value of the dollar is weak,” said Phil Flynn, senior market analyst at Alaron Trading.

Another analyst echoed the same sentiment. “All else equal, people would think that in a stable commodity market and a negative financial market – people would have more faith in the commodity place,” said Neal Dingmann, director of equity research at Dahlman Rose.

Armored personnel carriers and troop trucks blocked the bridge to the Black Sea port city of Poti, and Russian forces excavated trenches and set up mortars facing the city. Another group of APCs and trucks were positioned in a nearby wooded area.

Although Russian President Dmitry Medvedev has promised that his forces would pull back by Friday, Russian troops appear to be digging in, raising concern about whether Moscow is aiming for a lengthy occupation of its small, pro-Western neighbor.

Food prices are forecast to rise by 5 percent to 6 percent this year, making it the largest annual increase since 1990. Just last month, USDA forecast food prices would climb between 4.5 and 5.5 percent in 2008.

“It’s a little bit of a surprise how strong some of the numbers were in July,” USDA economist Ephraim Leibtag, who prepared the forecast, said in an interview.

“We’ve been waiting for some moderation, but especially with some of the meat prices and how much has come through relatively recently (at the retail level) leads me to believe the overall number may be a little bit higher for the year,” he added.

Leibtag said he expected food prices to moderate, but the timing depends on what happens to volatile energy and food ingredient costs.

The report comes a day after NATO foreign ministers said they would make further ties with Russia dependent on Moscow making good on a pledge to pull its troops back to pre-conflict positions in Georgia. However, they stopped short of calling an immediate halt to all cooperation.

The Nordic country’s embassy in Moscow received a telephone call from “a well-placed official in the Russian Ministry of Defense,” who said Moscow plans “to freeze all military cooperation with NATO and allied countries,” Espen Barth Eide, state secretary with the Norwegian ministry said.

Eide told The Associated Press that the Russian official notified Norway it will receive a written note about this soon. He said Norwegian diplomats in Moscow would meet Russian officials on Thursday morning to clarify the implications of the freeze.

“It is our understanding that other NATO countries will receive similar notes,” Eide said. The ministry said the Russian official is known to the embassy, but Norway declined to provide a name or any further identifying information.

A Kremlin official declined to comment on the report. But the Interfax news agency, citing what it called a military-diplomatic source in Moscow whom it did not identify, reported that Russia is reviewing its 2008 military cooperation plans with NATO.

Officials at NATO headquarters in Brussels said Moscow had not informed the alliance it was taking such a step.

Washington described the reported move as unfortunate.

“If this indeed is the case, it would be unfortunate. We need to work with Russia on a range of security issues, but we are obviously very concerned about Russian behavior in Georgia,” U.S. State Department spokesman Robert Wood said.

The ITAR-Tass and RIA-Novosti news agencies, citing an unidentified member of the Russian mission to NATO in Brussels, reported that Russia’s NATO envoy Dmitry Rogozin has been called back to Moscow for consultations on relations and between Russia and NATO, including military cooperation.

RIA-Novosti said Rogozin would return to Moscow late this week.

Eide said he hoped NATO and Moscow would get back on track with dialogue and cooperation but said that Russia would first have to comply with a cease-fire in Georgia.

“I regret the situation has come to this,” he said.

President Assad in meetings in Moscow this week expressed support to Russia’s intervention in South Ossetia and Georgia. He also expressed interest in the establishment of Russian missile air defence facilities on his land.

A request by Gen. David McKiernan, the commander of NATO forces in Afghanistan, for three U.S. brigades with support staff has been approved. “Now that means we just need to figure out a way to get them there,” adds a senior defense official.

The troops are slated to arrive earlier than has been previously discussed, on the heels of the deadliest months for American forces in Afghanistan since the war began.

Officials say the Border Crossing Information system, disclosed last month by the Department of Homeland Security in a Federal Register notice, is part of a broader effort to guard against terrorist threats. It also reflects the growing number of government systems containing personal information on Americans that can be shared for a broad range of law enforcement and intelligence purposes, some of which are exempt from some Privacy Act protections.

While international air passenger data has long been captured this way, Customs and Border Protection agents only this year began to log the arrivals of all U.S. citizens across land borders, through which about three-quarters of border entries occur.

The volume of people entering the country by land prevented compiling such a database until recently. But the advent of machine-readable identification documents, which the government mandates eventually for everyone crossing the border, has made gathering the information more feasible. By June, all travelers crossing land borders will need to present a machine-readable document, such as a passport or a driver’s license with a radio frequency identification chip.

In January, border agents began manually entering into the database the personal information of travelers who did not have such documents.

The disclosure of the database is among a series of notices, officials say, to make DHS’s data gathering more transparent. Critics say the moves exemplify efforts by the Bush administration in its final months to cement an unprecedented expansion of data gathering for national security and intelligence purposes.

The data could be used beyond determining whether a person may enter the United States. For instance, information may be shared with foreign agencies when relevant to their hiring or contracting decisions.

Public comments are being taken until Monday, when the “new system of records will be effective,” the notice states.

“People expect to be checked when they enter the country and for the government to determine if they’re admissible or not,” said Greg Nojeim, senior counsel at the Center for Democracy & Technology. “What they don’t expect is for the government to keep a record for 15 years of their comings into the country.”

But DHS spokesman Russ Knocke said the retention period is justified.

“History has shown, whether you are talking about criminal or terrorist activity, that plotting, planning or even relationships among conspirators can go on for years,” he said. “Basic travel records can, quite literally, help frontline officers to connect the dots.”

The government states in its notice that the system was authorized by post-Sept. 11 laws, including the Enhanced Border Security and Visa Reform Act of 2002, the Aviation and Transportation Security Act of 2001, and the Intelligence Reform and Terrorism Prevention Act of 2004.

Nojeim said that though the statutes authorize the government to issue travel documents and check immigration status, he does not believe they explicitly authorize creation of the database.

“This database is, in a sense, worse than a watch list,” he said. “At least in the watch-list scenario, there’s some reason why the name got on the list. Here, the only thing a person does to come to the attention of DHS is to lawfully cross the border. The theory of this data collection is: Track everyone — just in case.”

The machines will scan a travellers’ face to compare them with the images on their biometric passports and open an automated gate when a match is registered.