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Oil hits record of $107 a barrel Oil hits record of $107 a barrel
(about 1 hour later)
Crude oil prices have hit another record, as investors continue to buy oil to protect themselves against the falling dollar. Crude oil prices have hit an all-time high for the fifth time in six trading sessions.
New York sweet crude added $1.85 to touch $107 a barrel, before falling back at $106.7. New York sweet crude added $1.85 to touch $107 a barrel, before falling back to trade at $106.6.
Commodities such as oil and gold are attractive when the US currency is falling as they are priced in dollars. The price beats the inflation-adjusted high set in April 1980 although the two measures are not strictly comparable.
The dollar was hit on Friday by a US employment report showing the labour market at its weakest in five years. The oil price is also being supported by last week's decision by producers' cartel Opec not to raise supply, despite rising demand in China.
The price is also being supported by last week's decision by producers' cartel Opec not to raise supply. Many analysts believe that traders are also buying oil, priced in dollars, to protect the value of their money against the sliding currency.
Brent crude gained 40 cents to trade at $102.78 a barrel. The dollar has been ticking off new lows against the euro and other key currencies since last summer, and was hit again on Friday by a US employment report showing the labour market at its weakest in five years.
This has prompted traders to seek refuge in commodities, including oil and gold, which are more likely to sustain their value than the greenback.
In Europe, Brent crude gained 69 cents to trade at $103.07 a barrel, also a new record.
Financial strain
Analysts at the International Energy Agency said that real oil prices are higher than the previous peak reached in April 1980, which was $102.53 in today's money.
But the oil price measure used then was slightly different to the one in current use and so it is difficult to make an accurate comparison.
The high oil price is making petrol and energy costs more expensive around the world, putting financial pressure on businesses and household budgets.