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Oil hits record of $107 a barrel Oil hits record at $108 a barrel
(about 4 hours later)
Crude oil prices have hit an all-time high for the fifth time in six trading sessions. The price of crude oil has 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 to trade at $106.6. New York sweet light crude touched a new high of $108.21 a barrel, before edging down to trade at $107.93.
The price beats the inflation-adjusted high set in April 1980 although the two measures are not strictly comparable. Analysts say traders are investing in commodities to protect themselves against the falling dollar.
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. Another factor pushing up prices is last week's decision by producers' cartel Opec to keep output unchanged, despite rising demand in China.
Many analysts believe that traders are also buying oil, priced in dollars, to protect the value of their money against the sliding currency. The dollar has been reaching 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.
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.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. In Europe, Brent crude hit $104.42 at one point on Monday - also a record.
Financial strainFinancial 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.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.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.The high oil price is making petrol and energy costs more expensive around the world, putting financial pressure on businesses and household budgets.