Oil rockets to all-time high

PRICES SOAR: Tensions in Nigeria and the falling dollar are contributing to oil's lofty price. (Getty Images)

Oil rose to a fresh record high on Thursday, hitting new peaks for the seventh trading day, as a weak dollar overshadowed an increase in US crude inventories.

US crude for April delivery struck a new high of $110.70 a barrel. It was trading at $110.44, up 52 cents by 1215 GMT.

London Brent crude for April, which expires on Friday, also hit a new peak at $106.80. It was trading at $106.55.

"We're looking at the US dollar, we're looking at speculation, we're looking at geopolitical. Those three things tying together are defying fundamentals," said Peter McGuire, managing director of Commodity Warrants Australia.

The dollar dropped to a 12-year low against the yen and a record low versus the euro on Thursday amid uncertainty about the long-term impact of the US Federal Reserve's efforts to ease strained credit and money markets.

"Commodities are likely to have been the key beneficiary of the aggressive Fed rate-cutting cycle," Citigroup said in its research note.

Investors have rushed into commodities to hedge against inflation and the softening dollar. That has contributed to oil's rally, despite concerns over a recession in top oil consumer the US and rising fuel inventories.

Oil prices rebounded after a drop on Wednesday caused by US government data that showed crude stocks rose more than expected last week and gasoline stocks were at a 15-year high. (Reuters)

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