Oil prices continue to spiral

Oil prices hit a new record of nearly US$126 today as a weakening US dollar and supply concerns boosted prices.

Light sweet crude for June delivery rose as high as $125.98 in New York, with Brent crude soaring above $124 a barrel.

Oil's record run has seen prices jump by nearly 30% since the start of the year, and more than double during the last 12 months.

It also heralds more misery at the petrol pump for hard-hit motorists and threatens efforts to keep inflation under control.

Investors are buying oil as a hedge against a dollar which is weakening as the US economy struggles.

The latest surge in the commodity came after the European Central Bank held its interest rate steady and signalled that cuts were unlikely because of inflation risks - strengthening the euro against the greenback.

Comments from the head of the Opec oil cartel suggesting there was no need to boost production as members countries were struggling to find buyers for extra supplies added to the pressure on prices.

Recent tension in oil-rich regions - such as attacks on Shell pipelines in Nigeria - have also been behind price hikes, while analysts at investment bank Goldman Sachs have predicted that oil could reach $200 a barrel within two years.