FACTBOX-Why oil prices are at a record high
(Reuters) - U.S. crude oil hit an all-time high of $119.93 a barrel on Monday.
Robust demand for crude and a weak dollar have fuelled the rally from a dip below $50 at the start of 2007.
Adjusted for inflation, oil is now above the $101.70 peak hit in April 1980, according to the International Energy Agency, a year after the Iranian revolution.
DOLLAR WEAKNESS
The fall in the value of the dollar against other major currencies has helped drive buying across commodities as investors view dollar assets as relatively cheap.
Some analysts say investors have been using oil as a hedge against the dollar.
At the same time, the weakness of the dollar has also cut the purchasing power of OPEC's revenues.
OPEC oil ministers have said that although prices are at a record nominal high, inflation and the dollar have softened the impact.
FUND MONEY
Since the Federal Reserve cut U.S. interest rates and central banks pumped billions of dollars into financial markets to ease a credit crunch, oil and gold have risen.
Investment flows from pension and hedge funds into commodities including oil have boomed, as has speculative trading. At the same time, the credit crunch has brought some other markets, such as the U.S. asset-backed commercial paper market, to a virtual standstill.
Some of that money has found its way into energy and commodities, analysts say.
SUPPLY CUTS
Supply of crude from Nigeria has been cut since February 2006 because of militant attacks on the country's oil industry.
Exxon Mobil (XOM.N) on Monday said it had declared force majeure on its Nigerian shipments after essentially all its roughly 800,000 barrels per day (bpd) of crude production was shut because of a strike.
That added to about 564,000 bpd of production, as detailed by oil companies, that was already shut due to militant attacks and sabotage. The total represents more than half of Nigeria's output. Continued...





