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Crude oil prices soared to a record $98 a barrel after rallying $3.36 on a continued weakening of the U.S. dollar.
A cheaper dollar makes oil more attractive to buyers in other countries--as well as speculators--which boosts demand for crude.
"A weaker U.S. dollar and talk that the U.S. Federal Reserve Board may cut interest rates to mollify a weak housing market were seen as encouraging a fresh cycle of speculative buying," said Citigroup analyst Tim Evans.
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U.S. light, sweet crude for January delivery [US@CL.1
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] closed New York Mercantile Exchange trade up $3.36, or 3.6 percent, at $98 per barrel. During trade, it hit an intraday high of $98.19 -- still below the intraday record of $98.62 set on Nov. 7.
London Brent crude [GB@IB.1 Loading... ()] was also higher.
Heating oil [US@HO.1 Loading... ()] also struck an intraday record.
Looking ahead, the U.S. Energy Information Administration will release a closely watched weekly fuel inventory snapshot tomorrow which is likely to determine price direction in the short term.
Citigroup analyst Tim Evans noted that while he expects US crude stocks to have risen last week "the rise would look modest" in comparison with gains made in previous years at this time.
Analysts reckon that in the week to Nov 16 crude oil stocks rose by 1 million barrels, gasoline inventories rose to 460,000 barrels and distillates fell by 500,000 barrels.
The U.S. is the world's top energy consumer.
The market also expects refinery utilization to have increased by 0.40 percentage points from the week before to operate at 88.1 percent of their operable capacity.
Cameron Hanover analyst Peter Beutel said at this time of year crude oil stocks have increased in each of the last five years.
"Utilization has increased in four of the past six years. If we get another report with both higher, it will be a boost for the supply side as we get an early taste of this approaching winter," he said.
Wire services contributed to this report.
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Data is a real-time snapshot *Data is delayed at least 15 minutes