London: Oil prices struck a record high of $109.20 (Rs4,422.6) per barrel on Tuesday after the dollar hit a fresh all-time low against the euro, and amid persistent supply concerns, traders said.
New York’s main oil contract, light sweet crude for delivery in April, soared to the historic level, beating the previous peak of $108.21 that was set on Monday.
Also on Tuesday, Brent North Sea crude for April hit a record high $105.40 on barrel, beating the prior high of $104.42 touched on Monday.
In the foreign exchange market, the European single currency surged to a record high $1.5495.
A weaker US currency tends to increase demand for dollar-denominated oil as it becomes cheaper for buyers using stronger currencies.
Oil prices are also heading higher because investors are seeking a safe investment for their cash amid fears of rising inflation and a US recession, analysts said.
“Inflation fears are still very strong, outweighing prospects of a slower growth in the US and lower seasonal demand for oil in the second quarter,” said Sucden analyst Andrey Kryuchenkov
At the same time, the oil market is under intense pressure from stretched supplies and demand from the US—the world’s biggest energy consuming nation—and Asian powerhouses China and India.
The International Energy Agency (IEA) warned Tuesday that there is unlikely to be much relief from current high oil prices because of brisk demand in China and other emerging markets.
Towering, $100-a-barrel crude prices continue to chip away at oil consumption in the US and other developed countries, the Paris-based agency said in its monthly report.
The IEA revised down 2008 crude consumption in the US, Europe and other developed markets, forecasting a drop of 190,000 barrels a day to 49.3 million barrels a day.
In past years, falling demand in rich countries delivered some relief from high oil prices. But today, most of the oil demand growth is coming from China, India and other fast-growing emerging markets.
AP contributed to this story.