Updated on Friday, March 07, 2008, 00:00 IST

New York, March 07: Oil hit a record high near USD 106 on Friday (GMT), fuelled by the weak dollar and OPEC's decision to hold crude output steady.

US oil settled up 95 cents at $105.47 a barrel after hitting a record $105.97 a barrel during the session. London Brent crude rose 97 cents to settle at $102.61 a barrel, after hitting a record $102.95.

The gains followed a $5 jump on Wednesday, after declining US crude inventories and a decision by the Organization of the Petroleum Exporting Countries to maintain production levels despite consumer-nation calls for more oil.

Speculative buying as investors seek a hedge against inflation and a tumbling dollar also drove oil prices higher.

"The dollar is going down again and hedgers are buying commodities and this is all adding fuel to the fire," said Mark Waggoner, president of Excel Futures.

The dollar extended losses against the Euro and the Yen after US pending home sales were reported unchanged in January, doing little to allay investor worries over the deteriorating U.S. economic outlook.

The surge a day ago marked oil's single biggest price gain in absolute dollar terms, although there have been larger daily percentage price gains.

"The crude squeeze continues. The sharp rise in crude was exacerbated by a weak U.S. dollar, OPEC's decision to stand still," Citigroup said in a research note.

Bureau Report