NEW YORK Oil slipped on Friday as investors took profits from a record rally this week to $111 a barrel, but losses were tempered by a late-season surge in heating oil.
"Distillate supplies are tight, and this is causing a squeeze in heating oil futures," said Phil Flynn, an analyst at Alaron Trading in Chicago.
U.S. crude settled down 12 cents to $110.12 a barrel in volatile trade after touching a record for the seventh time in a row the previous session. London Brent settled up 1 cent to $107.55 after touching a record of $108.02 earlier in the session.
Crude oil prices have jumped about 15 percent so far this year in part because of a steep decline in the U.S. dollar -- a factor that has supported the nominal value of all commodities priced in the currency.
Oil analysts have said they expect oil's inverse relationship with the dollar to last until there are significant signs that underlying commodities demand is eroding because of the U.S. economic slowdown.
Meanwhile, tight stockpiles of middle distillates like heating oil, diesel and jet fuel in the midst of extensive refinery maintenance in the United States and Europe are also underpinning energy markets.
Heating oil futures HOc1 touched a record $3.2220 a gallon before settling at $3.1465, up 2.17 cents. Gas oil futures, the benchmark for European diesel, heating oil and jet fuel prices, hit a fresh record of $1,000.50 a tonne.
U.S. heating oil distributors are asking the U.S. government release stockpiles from the Northeast emergency reserve amid high retail prices and low regional inventories, a source said.
The U.S. Department of Energy declined to comment on whether they would grant the request.
Adding support to energy markets, the Organization of the Petroleum Exporting Countries again shrugged off calls for more supply. OPEC said on Friday it was pumping more than enough crude to keep consumers satisfied and a potential U.S. recession could mean lower demand for its crude.
OPEC, in its monthly oil market report, said there was little risk of a rise in oil demand growth forecasts given the slowing economy of the world's top fuel consumer.
(Reporting by Richard Valdmanis in New York and Margaret Orgill in London; Editing by Marguerita Choy)