Oil prices eased off a new record on Friday after buying by speculators hedging against the weaker dollar and inflation sent prices above $106 a barrel.
U.S. light crude settled at $105.15 a barrel, trimming gains after hitting an all-time high of $106.54 earlier in the trading session. London Brent crude traded 26 cents lower at $102.35 a barrel.
"We rose earlier on the dollar play and expectations that the Fed may have to lower rates," said Rob Kurzatkowski, a futures analyst with optionsXpress. "This has lately been an inflation and currency play."
A government report showing a second straight month of contractions in U.S. payrolls spurred talk the Federal Reserve might cut interest rates again, weakening the dollar early in the day. The greenback later rebounded, helping to ease oil off earlier highs.
The steady decline in the U.S. dollar has helped push commodity prices higher, while a sharp drop in U.S. crude stocks and OPEC's decision on Wednesday not to increase output also boosted oil prices.
While U.S. crude inventories had been building in recent weeks and U.S. gasoline stocks were at 14-year highs, a U.S. government report showed crude stocks fell by 3.1 million barrels last week, against forecasts for an increase.
The Organization of Petroleum Exporting Countries, which pumps more than a third of the world's oil, has long argued the current high prices do not reflect market fundamentals and are being driven by speculation.
Influential Saudi Oil Minister Ali al-Naimi reiterated that view in remarks published on Friday, saying speculation was behind triple-digit oil and made it impossible for any organization to control price movements.
"Today there is no link between oil (market) fundamentals and prices," he told Moroccan newspaper Asharq al-Awast. "The duty of oil exporters is to make sure that fundamentals are healthy," said Naimi. "If these fundamentals were stable and fulfill market needs, then there is no need to raise or decrease production."
OPEC will next meet in September, although ministers could confer informally at a conference between consumers and producers in Rome April 20-22.
"Leaving things so open-ended gives me and others a clear impression that the cartel is prepared to let prices run away for the time being. Perhaps they feel the weakness in the dollar would offset any rise in price," said Rob Laughlin at MF Global.
Tensions between OPEC member Venezuela, a top oil exporter to the United States, and neighbor Colombia, also have underpinned oil prices.