Oil surged to a new record high of nearly $140 a barrel this afternoon, as weakness in the US dollar offset the impact of plans by Saudi Arabia to boost output.
US crude was up $2.01 at $136.87 this evening, having earlier hit a record high of $139.89. London Brent crude was up $1.74 at $136.75, having touched $139.32 earlier.
The dollar fell after the publication of weak manufacturing figures from the New York area, and as euro zone inflation hit a new record, increasing expectations of a rise in euro zone interest rates. A weak US currency makes oil cheaper for foreign buyers, boosting demand.
Earlier in the day, oil prices had dropped back after United Nations chief Ban Ki-moon said over the weekend that Saudi Arabia, the world's biggest oil exporter, was set to increase output to 9.7 million barrels per day in July, its second supply boost in as many months.
But dealers said doubts later began to emerge on how much the Saudi output increase would dampen prices, with many traders reporting very little interest in Saudi crude at current prices
