Oil hit a record high nearing $106 today as a weak dollar helped prices to extend the previous day’s gains, which were prompted by a drop in US oil inventories and Opec’s decision to keep output unchanged. US light crude for April delivery struck a new record of $105.96 a barrel and was trading $1.05 higher at $105.57.

London Brent crude was up 84 cents at $102.48, shortly after setting a new record of $102.95. “The crude squeeze continues. The sharp rise in crude was exacerbated by a weak US dollar, Opec’s decision to stand still,” Citigroup said in a research note.

The dollar fell to a record low against the Swiss franc and hit a fresh trough against the euro on Thursday.

On Wednesday, US crude had settled $5 higher after US Energy Information Administration data showed a 3.1 million barrel drop in crude stocks, against analysts’ forecast for an increase. Distillate inventories, including heating oil, fell 4.8 million barrels, dropping for the fourth consecutive week as colder weather boosted heating demand in the US. Gasoline stocks rose again to another 14-year high.

Citigroup said that US crude and product stocks altogether fell 4.5 million barrels, while a seasonal norm for this time of the year was a 3.3 million barrel drop. Opec on Wednesday decided to leave its output unchanged, dismissing a call from the United States, the world’s top energy consumer, to act to tame prices.

The oil producer group’s ministers also decided to meet next in September and not to call a further extraordinary meeting. But they could confer informally at a conference between consumers and producers in Rome on April 20-22. “This suggests to me the cartel would allow prices to move sharply higher without adding extra barrels to the marketplace,” said Robert Laughlin with MF Global in a research note.

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