Oil rose sharply to $83 per barrel on Thursday, as a weak dollar and supply worries ahead of the winter heating season encouraged buying by financial investors.
U.S. light, sweet crude settled up $2.58, or 3.24 percent, at $82.88 per barrel after reaching as high as $83, bringing it within sight of last week's record $83.90.
London Brent was up $2.60 at $80.03.
"Funds are flowing into the global commodity markets with the dollar continuing to weaken," said Andy Lebow, analyst at MF Global.
"This is a macro-economic move and speculators think this will continue."
The dollar fell briefly to an all-time low Thursday, on concerns over a slowdown in the U.S. housing sector. The weak dollar, which can strengthen the nominal value of commodities traded in the currency, also boosted metals prices.
"In non-dollar terms, the rise in crude oil is more manageable and takes the wind out of the sail of people who say it's over-priced," said Stephen Schork, editor of The Schork Report.
Meanwhile, government data showing a drop in U.S. jobless claims last week reinforced the impression the economy of the world's largest energy user remained resilient.
Oil experts are concerned that continued robust demand in the United States and other consumer nations could tighten up world stockpiles when cold weather hits.
U.S. distillate supplies, which include heating oil, are running more than 7 percent below year-ago levels, helping fuel a more than 3 percent rise Thursday in New York heating oil futures.
The Organization of Petroleum Exporting Countries agreed earlier this month to hike oil output by 500,000 barrels per day to soothe fears of a winter crunch, but many traders said the increase was too little.
Ongoing jitters over supply disruptions during the rest of the hurricane season were also supporting gains, dealers said, after a tropical depression last week briefly cut more than 60 percent of U.S. oil production from the Gulf of Mexico in the heaviest blow to the region's output since 2005.
Mexican state oil company Pemex said on Thursday it did not expect a tropical storm in the Bay of Campeche to impact offshore oil production or damage rigs.
Analysts said the backwardated structure of the oil curve -- where prices for nearby delivery are higher than those for delivery farther out in the future -- was also luring financial investors into oil.
"For the financial players, it's a no-brainer. You buy the front [month] and then roll and collect every month. You can print money," said Michael Wittner, analyst at Societe Generale.
Meanwhile, in Nigeria, gunmen disguised as soldiers killed one foreign oil worker and abducted another Thursday -- underscoring the supply risks from the world's eighth largest oil exporter.