Violence in Nigeria, Algeria and Pakistan, the weak US dollar and the threat of cold weather have all raised prices after the new year break.

US light, sweet crude fell back to $99.30 a barrel in electronic trading, while London Brent crude shed 43 cents to $97.41 a barrel.

US crude touched $100 a barrel in the previous session, beating the previous peak of $99.29 set in November 2007.

Stocks fall

The rise in oil prompted a drop in shares and a surge in gold prices.

The US benchmark stock index, the Dow Jones, closed down 220.9 points, or 1.7%, at 13,044.0.

Asian stocks also fell, with Hong Kong's Hang Seng Index down 480 points to 27,080 by lunch.

There are concerns that the high price of oil will stoke price pressures at a time when many central banks are trying to cut interest rates to stimulate growth.

"It's going to have a huge impact on overall global inflation," said Steve Rowles, a commodities strategist with CFC Seymour securities in Hong Kong.

Reserves

Despite oil hitting $100 a barrel, the White House said it would not open up the nation's emergency crude reserves to bring down prices.

Indonesia's Opec governor warned on Thursday that oil prices could climb to the $100-$110 level and said the cartel might decide to increase output at its 1 February meeting in Vienna if supply was insufficient

Oil traders were waiting for the release of weekly US petroleum supply data later in the day, and some expected crude futures to rise above the $100-a-barrel level if the government reported crude inventories fell by more than expected, analysts said.

"We're so close to $100 right now," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

"If the US inventory report indeed shows stock draws, and particularly bigger than expected draws, plus a heightening of geopolitical risks and a falling US dollar, all these factors could push pricing beyond $100," he said.

(BBC)

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