U.S. crude oil futures rose sharply higher on Wednesday, lifted by a tumbling dollar to settle at a record close near $110.
Crude oil futures bounced off an early low, shrugging off government inventory data showing a large crude supply build last week.
On the New York Mercantile Exchange, April crude
Investors have been pouring money into commodities to hedge against inflation and the dollar, which sank to a record low against the euro.
"The crude oil uptrend is so strong it will not die easily. The weak dollar is part of why futures have so far not fallen further after the data," said Tom Bentz, analyst at BNP Paribas Commodity Futures.
London Brent was also up Wednesday.
Oil's record run, propelled in part by its growing appeal to financial investors, has prompted some analysts to speak of a disconnect between prices and oil's fundamentals, including supply and demand.
"There has been a huge detachment between price and fundamentals in the energy markets," said Rob Kurzatkowski, futures analyst at optionsXpress. "It has been more of a dollar play of late."
A big boost in oil supplies in the United States briefly sent prices down by over a dollar earlier on Wednesday.
U.S. crude stocks rose by 6.2 million barrels last week, the Energy Information Administration report showed, more than the 1.7 million-barrel boost expected by analysts. Gasoline stockpiles rose to a 15-year high.
"It is a ridiculously bearish report," said Stephen Schork, editor of The Schork Report, a newsletter. "The main thing is the gasoline build."
"We have major concerns regarding the economy in the United States, rising supply, falling demand, why is crude oil trading at over $100 per barrel; it makes no fundamental sense."
Stocks of distillates in the United States fell by 1.2 million barrels, according to the EIA report, less than the 1.9 million-barrel decline expected. Gasoline inventories have risen for 18 consecutive weeks.
"You can't swing a cat without hitting a gallon of gasoline in this country," Schork said.