Oil prices hit a record above $109 (£54) per barrel as weakness on the dollar triggered buying, extending a rally which has seen the price of crude surge around 15 per cent in just one month.

A weaker dollar, which again hit a fresh record low against the euro and is vulnerable to further weakness, helped the rally. Commodities priced in the dollar have become relatively cheaper for those trading in stronger currencies, which has induced buying.

Stephen Schork, editor of The Schork Report, said there was “no end in sight” for the current rally, as speculative interest has increased for four weeks in a row.

In morning trading, New York’s WTI crude for April delivery was up $1.07 at $108.97 per barrel, after hitting a record of $109.20.

In London, Brent crude for April delivery was up $1.01 at $105.17 per barrel, having hit a record of $105.40 earlier.

Prices were already well underpinned, as investors continued to favour the commodity sector, which is offering them better returns than ailing equity markets.

“The key to the outperformance lies in the huge amount of funds flowing into commodities, as the spectre of a US recession casts an ominous shadow over the markets,” said Paul Harris, Bank of Ireland analyst. “Investors see the commodity suite as the only game in town which will deliver attractive returns.”

Explore Markets

• United States

• Europe

• Japan

• China

• Russia

• The Gulf

• India

• Africa

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive