Dealers said oil had fallen in early trade on profit-taking but concerns over the weakness of the dollar and tightening supplies provided support and news of the Cheney trip then added an extra twist.
The New York contract for April delivery hit a record $ 106.54 per barrel on Friday.
The latest spike came as the White House said yesterday that Cheney would next week urge Saudi Arabia to push OPEC to boost output in an effort to rein in sky-high prices.
“I’m sure that energy issues will come up,” spokeswoman Dana Perino said in a preview of Cheney’s trip to the Middle East next week. “Obviously we want to see an increase in production.”
The Organization of the Petroleum Exporting Countries (OPEC), which produces 40 percent of the world’s crude, decided at a policy meeting last week to maintain its daily production target of 29.67 million barrels despite calls by US President George W. Bush for it to do more.
OPEC blamed the high cost of crude on speculative buying as investors sought a hedge against a weakening dollar and rising inflation.
The weak US currency, which fell to a new low of 1.5464 against the euro on Friday, encourages demand for dollar-priced commodities like oil because it makes them cheaper for buyers using other currencies.
“Tight fundamentals remain the dominant force underpinning prices in our view, with the combination of disappointing non-OPEC production, solid non-OECD demand and defensive OPEC output policy all exerting upward pressure on prices,” said Barclays Capital analyst Kevin Norrish.
At about 1550 GMT, New York’s main oil contract, light sweet crude for delivery in April, stood at $ 106.25, up $ 1.10 from Friday’s close.
Brent North Sea crude for April gained 45 cents to $ 102.83. It had struck an historic peak of $ 103.98 on Friday.
Oil prices had dropped in early trade yesterday amid concerns that energy demand would drop in the United States because of its weak economy, analysts said. Prices also fell on easing geopolitical tensions involving crude producer Venezuela, they added.
Markets were thinking in terms of a US recession after official data Friday showed that the US economy lost 63,000 jobs in February, the steepest drop since March 2003.
“If more of such bad economic data comes out, it will weigh down on the oil market as it triggers investors to exit oil as fast as they came in,” said Victor Shum, an analyst with energy consultancy Purvin and Gertz.
