Oil sets new record near $120, $200 possible
Oil hit a new record near $120 a barrel on Monday, boosted by a string of bullish factors that include a UK refinery strike and disruptions to Nigeria's output that highlight the market's anxieties over threats to supply.
Prices held firm below earlier highs, despite a rally in the US dollar versus the euro and yen, which reflected growing expectations that the US Federal Reserve may not cut interest rates this week.
US light crude for June delivery was up 28 cents at $118.80 a barrel by 1055 GMT, after a lifetime high of $119.93. Prices are up almost 25 percent since the start of the year.
"The Federal Reserve will have a chance to bolster the dollar if it decides to hold the line on further rate increases," Edward Meir, analyst with broker MF Global, said in a research note. "Both these developments could possibly induce a correction in energy prices later in the week, but for now the trend appears higher still."
Crude prices have surged more than fivefold since 2002 as global supplies struggle to keep pace with rising demand in emerging economies, such as China.
The Organization of the Petroleum Exporting Countries (OPEC), that produces more than a third of the world's oil, has refused to pump more, saying the market is adequately supplied.
OPEC President Chakib Khelil blamed the fall in the US dollar for high prices and did not rule out prices rising to $200 a barrel.