The price of oil struck a record high of $109.72 a barrel this afternoon after the dollar hit a fresh all-time low against the euro. Persistent worries about supply also helped lift prices.
However, US light crude for April delivery slipped back to $107.92 a barrel by 5.50pm this afternoon.
London Brent crude rose 23 cents to $104.39, off its record high - hit today - of $105.82.
Today was a record-beating day across the board, with US crude beating the previous peak of $108.21 set on Monday. Brent North Sea also beat the previous high of $104.42 touched on Monday.
Earlier, the euro had hit a new high of just below $1.55 against the US dollar. A weaker US currency tends to increase demand for dollar-denominated oil as it becomes cheaper for buyers using stronger currencies.
Analysts say oil prices are also heading higher because investors are seeking a safe place for their cash amid fears of rising inflation and a US recession.
In Paris, the International Energy Agency warned that high prices were here to stay. The IEA trimmed its monthly estimate for world oil demand this year to 87.5 million barrels per day, but this was still an increase of 1.7 million barrels per day compared with 2007.
