Oil hits record near $112 as dollar slumps

Oil rose to a record near $112 a barrel today as the U.S. dollar sank to all time lows on growing concerns over the health of the world's largest economy.

U.S. crude for April hit a fresh high of $111.80 a barrel and was trading 20 cents up at $110.41 by 1210 GMT May London Brent was 15 cents higher at $106.35. Crude oil prices have risen by about 16 percent so far this year. Key commodities including oil have hit record highs as investors have shifted money to hedge a weakening U.S. dollar.

"The recent oil prices have been swayed by the currency moves. Investors are seeking safe haven from shrinking dollar assets," said Tony Nunan, risk management executive at Tokyo-based Mitsubishi Corp. "Also weaker dollar means non-dollar cost of energy does not increase so much, so demand stays healthy."

The dollar slid to all time lows across the board as the spiralling U.S. financial crisis led to JPMorgan Chase acquiring its strichen rival investment bank Bear Stearns. That stirred fears that more financial firms may become casualties. The Federal Reserve took more emergency measures to stem the fast-spreading financial crisis, cutting its discount rate on Sunday. Fed policy-makers are set to meet on Tuesday and are widely expected to lower the benchmark federal funds rate by up to a full-point. Ministers of the Organization of the Petroleum Exporting Countries maintain their view that high oil prices are not related to fundamentals, but are due to speculation and the U.S. dollar's fall.

"There is no problem at all with world oil inventories," Kuwait's Oil Minister Mohammad al-Olaim said in comments published by state news agency KUNA on Monday, echoing similar remarks on Sunday by OPEC President Chakib Khelil. Adding support to energy markets, Iraq halted pumping of Kirkuk crude through its northern pipeline to Turkey on Sunday due to a minor breakdown, although this was expected to resume soon, a shipping source said.

In Nigeria, an oil workers' union called for a strike in the oil sector starting on Wednesday to protest about a labour dispute at the Nigerian arm of ExxonMobil, a union boss said.