An analyst said that a 'perfect storm' of factors has led to record oil prices [AFP]

Supply concerns from Opec members Nigeria and Iran as well as a weaker dollar pushed US crude prices up by $4 to $120.36 before closing at $119.97 on Monday.

Threats to pipelines in Iraq are also thought to have raised the commodity's value.
 
"People are piling back up on crude oil due to the weakness of the dollar and production issues in Nigeria," Phil Flynn, an analyst at Alaron Trading in Chicago, told Reuters.
 
"But it also looks like momentum play after Friday's positive reaction to the unemployment report."
 
US government data released on Friday showed US payrolls fell by 20,000 jobs in March, a quarter of the losses expected.

This development helped counter concerns that the weaker US economy could drag down oil demand.

And a Monday report from the Institute for Supply Management showed the US service sector grew unexpectedly in April.

The dollar fell broadly on Monday, however, as foreign exchange investors decided the world's biggest economy was still struggling.

Further support for oil came from Iran's announcement on Monday that it would not consider any incentives offered by world powers that would constrain its right to nuclear technology.

The tensions add concerns that Iran's oil supply will be tightened, increasing the price traders are willing to pay.

In Nigeria, Royal Dutch Shell was forced to close additional production when fighters attacked a flowstation in the oil-rich Niger Delta.

Skirmishes between Kurdish and Turkish fighters in northern Iraq on Friday and Saturday also added to speculation of reduced oil supply.

Opec nations have refused to be persuaded by consumer nations to increase production, blaming speculators for swelling prices.

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