UPDATE 1-Oil hits record above $99 as dlr sinks, US chills

(Updates lead, prices paras 1-3, new dollar lows para 7, adds quote para 12)

By Angela Moon

SEOUL, Nov 21 (Reuters) - Oil soared to record highs on Wednesday, drawing within a hair's breadth of the $100 milestone as the U.S. dollar plumbed new lows and the onset of cold U.S. weather stirred anxiety over winter supplies.

U.S. light crude for January delivery CLc1 surged to a record of $99.29 a barrel early in the session, but pared those gains to stand 61 cents higher at $98.64 by 0706 GMT.

Prices blasted past the previous $98.62 a barrel record, extending a rally that has lifted oil more than 40 percent since August, as funds buy in on the weakening dollar and concerns that limited OPEC supplies will squeeze winter supplies.

"Oil prices have every reason to rise. Speculative money is coming into the market as the dollar is weakening," said Koo Ja-kown, crude analyst at Korea National Oil Corp (KNOC). "On top of that, there are supply concerns for winter fuel."

London Brent crude LCOc1 rose 50 cents to $95.99 a barrel.

Oil has been rising inversely to the dollar over the past months amid a fever of speculative trading. The falling dollar helps protect demand for oil in non-dollar economies and could prompt OPEC producers to sustain a higher price to offset the reduced purchasing power of petrodollar revenues.

The dollar dropped to a new record low against the euro and versus a basket of currencies on Wednesday, after the U.S. Federal Reserve cut its growth outlook for next year, keeping alive hopes for another interest rates cut in December. [USD/]