UK drivers are facing a new year surge in petrol prices after crude oil exceeded $100 per barrel for the first time last night.

Average UK prices for a litre of petrol have hit a new high of 103.3p - outstripping the previous record of 102.92p set on Boxing Day. The cost of filling a typical 50-litre tank is now £7.36 higher than it was one year ago.

The recent run of high prices showed little sign of abating this morning.

London-traded Brent crude rallied to a new all-time high of $98.26 a barrel while New York West Texas Intermediate crude was trading at $99.79, close to the $100 high touched briefly last night amid fears of dwindling US crude stockpiles, a weak dollar and continued geopolitical fears.

A wave of speculative money, combined with expectations that the US government is set to report a seventh consecutive weekly fall in US crude stocks later this afternoon threatens to propel oil back above $100 over the coming days, analysts believe.

During the week ended December 21, US crude reserves fell by 3.3 million barrels to 293.6 million barrels, the sixth consecutive decline in a row.

Today’s inventory report for the week ended December 28 is likely to dictate the short-term mood of the oil market.

Richard Savage, head of energy research at Mirabaud bank in London, said much of the recent decline in US oil inventories was not due to any tightness in supply but instead the result of industry players running down stocks to avoid year-end 2007/8 tax liabilities.

He said the recent rally was "primarily investor led" and claimed that a price of close to $100 per barrel was likely to suppress consumer demand for oil.

Continued political violence in Nigeria, Africa's biggest oil producer, was the immediate trigger for the spike in prices yesterday.

Traders are now eyeing a specially convened meeting of the Organisation of the Petroleum Exporting Countries on February 1 in Vienna.

At its last meeting in December in Abu Dhabi, OPEC refused to boost production to help allay fears about the impact of high oil prices on the global economy, despite calls for it to do so from consumer countries, including the US.

OPEC, which controls around 40 per cent of global daily output, is currently producing 27.25 million barrels, and said at the time that the global market for crude oil was "well-supplied", blaming speculators for the run of high prices.

It is thought that just one, relatively small trade was recorded at $100 a barrel yesterday - for only 1,000 barrels. The trader responsible made a small loss on the transaction.

Trading volumes yesterday were only 50 per cent of normal levels, meaning the price move was probably exacerbated by speculative flows.

Nevertheless, a breach of the $100 per barrel level represents an important psychological barrier for the oil market.

Pierre Terzian, director of Paris-based consultancy PetroStrategies, blamed the price spike squarely on speculative buying by hedge funds and other traders.

“I see no economic explanation for oil prices at present levels,” he said. “The market is well-supplied and there is potential for excess capacity. It’s pure psychology and financial position taking.”

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