The price of oil rose to an all-time high of $130.47 today as demand for fuel grows and the dollar weakened to a one month-low against the euro.

US crude rose by $1.49 on yesterday's close before falling back to $130.36 in early trading today, while London Brent gained $1.69 to $129.53.

Oil has surged by 14 per cent in just three days on a combination on factors including the weakening dollar which slumped to $1.5767 against the euro while a number of commentators increased their forecasts on oil prices since last week.

Robert Laughlin, an analyst at MF Global, told Reuters: “This market refuses to lie down. There is fresh length coming into the market even at these lofty levels.”

Yesterday, T. Boone Pickens, the billionaire oil investor, said he expected oil to hit $150 a barrel this year, after Goldman Sachs last week predicted that prices would reach $141 during the second half of the year. Credit Suisse and Societe Generale also both increased their forecasts.

Demand for fuel is expected to grow as crisis-hit China seeks extra diesel supplies while Opec, the 13 country cartel that produces 40 per cent of the world's oil, confirmed this week that it will not increase supplies before a key meeting in September, despite Saudi Arabia's pledge to President George W. Bush last week to raise production by 300,000 barrels a day.

Chakib Khelil, president of Opec, said: "…indications show that there is no shortage." Qatar oil minister Abdullah al-Attiyah also said there was no need to boost oil supplies to global markets, stating: “The market doesn’t need more oil." While the Iraqi oil minister Hussain al-Shahristani said: “There is more oil in the market than consumers want.”

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