Oil jumped more than $3 to strike a record over $120 a barrel today on the weaker dollar and supply concerns from OPEC members Nigeria and Iran.
U.S. crude gained $3.37 to trade at $119.69 at 11:55 a.m. Eastern time, after surging to $120.21 earlier. London Brent crude rose $3.33 to $117.89 in light trade due to a bank holiday in Britain.
"People are piling back up on crude oil due to the weakness of the dollar and production issues in Nigeria," said Phil Flynn, analyst at Alaron Trading in Chicago.
"But it also looks like momentum play, after Friday's positive reaction to the unemployment report."
U.S. government data released Friday that showed U.S. payrolls fell by 20,000 jobs in March, a quarter of the losses expected, helping to counter concerns that the weaker U.S. economy could drag down oil demand.
The dollar fell broadly today, however, as forex investors decided the world's biggest economy was still struggling. A report from the Institute for Supply Management issued today showed the U.S. service sector grew unexpectedly in April.
Further support for oil came from Iran's announcement that it would not consider any incentives offered by world powers that would constrain its right to nuclear technology.
The comments come just three days after major powers said they would make a new offer to convince the Islamic republic to halt its nuclear plans, a process which the West believes Tehran wants to master so that it can build nuclear weapons.
Iran's standoff with the West over its nuclear program added geopolitical concerns and fundamental tightness last year that sent crude to new highs.
Crude has continued to surge since then, extending a six-year rally that has sent prices up five-fold to near $120 a barrel last month on a wave of investment by speculators seeking to hedge against inflation and the weak dollar.
Additional supply worries came from Nigeria, where Royal Dutch Shell was forced to shut more of its production after militants on Saturday attacked a flowstation in the oil-rich Niger Delta.
Renewed clashes between Turkey and Kurdish rebels in northern Iraq also lent support to oil prices.
The Turkish army said on Saturday it killed more than 150 Kurdish PKK fighters in air strikes in northern Iraq last week, but the rebel group denied this and security forces in the region also expressed skepticism.
Crude oil speculators on the New York Mercantile Exchange cut net long positions last week, according to data from the Commodity Futures Trading Commission released on Friday.
Net crude long positions fell to 53,311 in the week to April 29th, down from 70,562 in the week to April 22nd.
Reuters