Oil leapt more than $2 a barrel to a new record high of $96.44 today as a weak US dollar and tight fuel stocks prompted buying by speculators.
Investors, wary of global equity markets where the full impact of the credit crunch has yet to become clear, see oil as a good bet, especially given tight fuel supplies in the run up to the northern hemisphere winter.
US crude rose $2.23 to $96.21 a barrel this afternoon, putting it on course to test the $100 mark. London Brent crude rose $2.08 to $92.57 a barrel after earlier setting a new record high of $92.65.
The prospect of more fallout from the US subprime crisis sent oil tumbling $2 a barrel yesterday as investors worried that slowing economic growth in the United States would curb demand for fuel.
Those concerns persisted today, pushing the dollar to record lows against a basket of major currencies. But stock markets recovered, and gold hit a 28-year peak.