Page last updated at 21:35 GMT, Tuesday, 11 March 2008

Oil sets fresh record above $109

Man changes prices at a petrol station in the US
The cost of petrol is soaring around the world

The price of crude oil has set a fresh record at $109.72, its fifth day in a row of historic highs.

New York light sweet crude fell back after hitting the high to close at $108.75. London Brent set a record at $105.82, before retreating to $105.25.

Prices fell back after the dollar rose on news that central banks worldwide were teaming up to provide more cash to strained financial markets.

A recent slide in the dollar was one factor behind the rally in oil prices.

Some investors are buying oil, which is seen keeping its value, to protect themselves against the weaker dollar.

Analysts are predicting that the dollar will weaken further if interest rates are cut again on 18 March.

White House concern

The White House said it was concerned about the "very high" price of oil and its impact on US consumers and small businesses but said it was not a problem that could "be solved overnight".

Only a protracted and severe global recession would justify a sustained dip in oil prices
International Energy Agency

"It would be wrong of the president to provide false hope to people who think that we are going to be able to have an immediate impact to reduce gas prices," said presidential spokeswoman Dana Perino.

Another factor pushing up prices was last week's decision by the Opec group of oil producing nations to keep output unchanged, despite rising demand for crude in China.

At the same time, the dollar has fallen to new lows against the euro and other key currencies, and was hit again on Friday by a US employment report showing the labour market was at its weakest in five years.

This prompted traders to seek refuge in commodities, including oil and gold, which are more likely to sustain their value than the US currency.

Opec has blamed the high prices on speculators, but in its latest monthly report the International Energy Agency (IEA) warned that speculation is not the only cause and that high oil prices are here to stay.

The IEA also said that while a slowdown in the US may moderate the demand for oil from the West, it would be offset by increased demand from the rest of the world.

"Only a protracted and severe global recession would justify a sustained dip in oil prices" to below $60 a barrel, the report said.

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