Oil hits record $100 a barrel 

Oil vaulted to a record $100 a barrel on Wednesday as violence in Nigeria, tight energy stockpiles and a weaker dollar triggered a surge of speculative buying, dealers said.

Oil's climb to the psychologically key triple-digit price sent stocks tumbling on Wall Street and darkened an already gloomy economic outlook in the United States, battered by a housing crisis and credit crunch.

"Oil hitting $100 a barrel has sparked some concerns about the consumer and inflation," said Todd Salamone, vice president of research at Schaeffer's Investment Research.

US crude traded once at $100 a barrel, up $4.02, then eased back to $99.58 by 2:06 EST (1906 GMT). London Brent crude rose $4.04 to $97.89.

"Oil could rise further from here. It's simple supply and demand fundamentals," said Kris Voorspools, energy analyst at Fortis in Brussels.

The White House said it would not open up the emergency crude oil reserve to lower prices, while an OPEC member said the cartel was powerless to bring the market down from its lofty height.

Crude oil prices jumped 58% in 2007, the biggest annual gain this decade. Oil has nearly tripled since 2000 - driven by rising demand in China and other developing countries, tight stockpile levels and geopolitical turmoil.

Weakness in the dollar has added to gains across the commodity sector as investors supported the underlying value of products denominated in the softening currency.

Wednesday's price surge of more than 4% came after suspected militant attacks in Nigeria's oil city Port Harcourt heightened concern over the potential for further disruptions in shipments from the eighth largest world oil exporter.

"With the military and the militant warlords engaged in a violent tit-for-tat, the risk for oil disruptions in Nigeria remains higher than in the past few months," said Olivier Jakob of Petromatrix.

Frequent attacks by militant groups since February 2006 have driven thousands of foreign oil workers from the oil-rich Niger Delta and cut oil exports by about 20%.

Investors are also particularly sensitive to signs of further fund investment in commodities at the start of the year. The broad Reuters/Jefferies CRB Index rose nearly 17% in 2007 as the sector rebounded from a loss in 2006.

A further decline in US crude stockpiles - already running at a three-year low - was also expected. Weekly government data will be released Thursday, a day later than usual due to the New Year holiday.

Stocks of crude in the United States were expected to have fallen 1.8 million barrels last week, the seventh straight week of decline, as refiners processed more crude, according to a Reuters poll.

Distillate stocks, which include heating oil and diesel, were forecast to have increased by 300,000 barrels after three weeks of decline, the survey showed.