Oil hits record $114

By Richard Valdmanis

NEW YORK (Reuters) - Oil prices jumped to a new peak over $114 a barrel on Tuesday amid lingering supply worries and weakness in the U.S. dollar, deepening concern in world consumer nations that a spike in energy costs could cause severe economic damage.

Prime Minister Gordon Brown on Tuesday called on the Organisation of the Petroleum Exporting Countries to boost production to counter rapidly rising oil prices, adding his voice to similar requests from the administration of U.S. President George W. Bush.

"We are not producing enough oil ... and we can take collective action to persuade OPEC and others to get the oil price down," Brown said in an interview on Sky Television.

Oil prices are up about 18 percent from the start of the year and more than 80 percent since last April.

U.S. crude settled up $2.03 at $113.79 a barrel, before reaching a fresh record of $114.08 in late electronic trade. London Brent crude settled $1.47 higher at $111.31 a barrel, after hitting an all-time high of $112.08 in earlier trade.

Oil and other commodities have rallied in recent months due to record weakness in the U.S. dollar. A weak dollar tends to raise prices for commodities denominated in that currency by boosting non-U.S. spending power and by attracting investors seeking an inflation hedge.

"One thing that is clearly driving the oil price is that the U.S. dollar has gotten substantially weaker in the past several months and quarter," said Richard Batty, energy analyst at Standard Life.

The dollar recouped some losses versus the euro Tuesday, after U.S. Treasury data showed foreigners increased purchases of U.S. assets in February.