The ever-weakening dollar and worries about winter fuel supplies sent US oil prices to a peak at $98.62 a barrel.That last sentence is problematic. Why is it that every week when oil prices get higher, the "inflation adjusted 1980 peak" keeps going up and up? A few months ago it was between $92-95 per barrel. A few years ago it was $80. A few days ago it was $99.04.
But prices later fell back sharply after US crude inventory figures showed a smaller than expected weekly fall.
US light, sweet crude settled down 33 cents at $96.37 while Brent closed at $93.24, down from a high of $95.19.
In recent sessions, record levels have been followed by falls of at least $1, and analysts say that prices are still on their way to $100 a barrel.
The weaker dollar has been driving up oil prices as investors have been using the commodity as an alternative to holding dollars, and crude prices have also been lifted in recent days by bad weather hitting North Sea oil rigs.
Oil prices have now risen by 60% this year and some analysts say that $100-a-barrel oil is inevitable.
"We're going to get $100 before too long," said Kevin Norrish of Barclays Capital.
"I think we'll get there," said Dariusz Kowalczyk at CFC Seymour. "The factors that have been driving the recent trend are still in place."
A big fall in US crude inventories might have been enough to push the price over $100 a barrel, but in the event the figures from the Department of Energy showed a smaller than expected drop.
US crude oil inventories fell by 800,000 barrels over the past week to 311.9 million barrels.
Oil prices have still not reached a record high if inflation is taken into account.
Adjusting for inflation, US light crude's record peak of $101.70 came in 1980 against a backdrop of war between Iraq and Iran.
The only reason I think it keeps changing is that it is being adjusted by the drop in the US Dollar. But that doesn't really make sense.
BTW - Tapis hit $100. (Tapis is one of the more expensive oil benchmarks. Other benchmarks include West Texas Intermediate - WTI - and Nymex. WTI is usually seen as the international benchmark price of oil)