The price of oil shot to a new high last night as Wall Street traders bought fuel contracts to offset the falling value of the dollar.

Energy traders were also unnerved by a fire at Shell’s Bacton gas terminal in Norfolk, which threatened more than 45 million cubic metres of gas supplies, about 13 per cent of National Grid’s forecast demand. The blaze – which started at 6pm – was extinguished. National Grid sought to reassure markets that the facility, the third-largest in the UK, was still receiving adequate supplies.

Light sweet crude oil for April delivery rose $2.95 to $102.59 a barrel in New York. Even after the market had closed, in after-hours trading, sweet crude continued to rise to $102.97. However, taking inflation into account, the price of oil is still lower than the record set in 1980, which by some calculations hit $104 a barrel.

Yesterday the price surged after US growth data showed that the world’s largest economy had expanded by just 0.6 per cent in the fourth quarter. While a slowing economy usually hits demand for oil, traders appeared to be buying sweet crude contracts as a hedge or as a means of offsetting the weakness of the dollar.

Further evidence of a slowing economy emerged as the US Labour Department admitted that the number of Americans claiming unemployment benefit had risen far higher than expected and that over a four-week period, jobless claims reached the same level as on the eve of the last recession in March 2001. Phil Flynn, of Alaron Trading in Chicago, said: “I really think that this is oil being viewed as a financial instrument.”

Oil traders also pointed out that foreign investors, scared off by the weakening dollar, chose to buy New York traded oil as a means of still gaining exposure to the US economy.

Oil prices have been boosted this week by speculation that Nigeria has suffered production glitches that temporarily disrupted the flow of crude oil.

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