Oil price leaps as US feels chill

FRESH fears of another year of spiralling oil prices resurfaced today as Brent crude jumped $1 to surge back above $30 a barrel.

Traders are forecasting a jump in demand in the US, the world's largest consumer of heating oil, later this week as temperatures fall below the seasonal norm.

Brent futures rose $1.37 to $30.69 - a huge rise given typical daily increases of 20 cents to 30 cents.

Traders believe crude will remain at its recent highs well into the year on fears of a further supply squeeze by oil cartel Opec and output levels in China and Russia.

Meanwhile, there was no respite for the battered dollar as it tumbled to yet another record low against the euro after a senior Federal Reserve policymaker signalled US interest rates would remain low for some time.

The comments, from Fed governing board member Ben Bernanke helped drive the dollar down to 1.2695 - its lowest since the single currency was launched five years ago. Against sterling, it hit an 11-year trough of 1.8064.

The dollar has been sliding in recent weeks on fears about America's ballooning current account deficit.

'I think policy is currently quite accommodative. I think it can remain quite accommodative for a while to come,' Bernanke said. US interest rates have been at 1%, their lowest since 1958, since June.

Gold benefited from the dollar's fall, surging to a 14-year high of $418.25 an ounce. A weaker dollar makes dollar-denominated bullion a cheaper investment for euro holders.