Oil eased after surging to a record high above $90 a barrel earlier this afternoon as tight fuel stocks ahead of winter and a softening US dollar spurred investor buying.
The jump in oil prices has been fuelled by unprecedented weakness in the dollar, which hit a record low against the euro today, a factor that has supported all dollar-denominated commodities.
US crude eased 12 cents to $89.35 a barrel by 2.11pm, having hit an all-time high of $90.07 earlier. London Brent crude slipped 43 cents to $84.17.
"The dollar weakened further, spurring some investment into oil as a hedge against dollar weakness," said David Moore, commodity strategist from the Commonwealth Bank of Australia.
"And there are still concerns that oil market conditions will remain tight over the northern winter."
Oil has averaged just over $67 a barrel this year and is climbing towards the inflation-adjusted high of $101.70 hit in April 1980, a year after the Iranian revolution.
The price run-up has concerned OPEC, which may call for an early formal meeting to discuss a further output increase. An OPEC supply rise of 500,000 barrels per day (bpd), agreed last month, will take effect on November 1st.
Although stocks of fuel in top consumer the United States rose last week, crude inventories stand about 4 per cent below a year ago, while gasoline and distillate stocks are about 7 per cent below last year.
Rising political tension between Turkey and Kurdish rebels in northern Iraq has also supported gains, as traders worry about a disruption in flows of Iraq's northern oil exports.