Oil prices repeatedly set record highs this week, surging nearly six dollars above the psychological barrier of $100 a barrel on a weak U.S. dollar and reluctance by producers to increase output. The huge jump in oil prices dragged the rest of Europe’s energy complex higher, while Russia’s latest payments row with Ukraine added more support to gas prices. U.S. light crude soared to an all-time high of $105.97 on Thursday and Brent crude oil followed on Friday with a record high of $102.98, after the Organization of the Petroleum Exporting Countries (OPEC) rebuffed calls for more oil and the United States reported a surprise fall in inventories. OPEC blamed U.S. economic mismanagement and market speculation for high oil prices, insisting supplies were adequate. But mounting tensions between oil producers Venezuela, Ecuador and Colombia increased jitters over supplies. Investors continued to buy dollar-denominated commodities like oil because the weak U.S. currency makes them more attractive and helps hedge against inflation. ICE gas oil futures hit a new record high of $968 a tonne on a diesel shortage in Europe and a bigger than expected drop in distillate stocks in the United States last week. The futures are used as benchmark for European diesel and heating oil prices. Diesel supplies are tight due to low stocks and extensive spring maintenance at European refineries.

The strength in oil sent curve prices on Britain’s NBP gas market upwards, as traders bought more gas on forward contracts in anticipation of rising prices in continental Europe. Russia’s cut in supplies of gas to Ukraine in a row over payments, and a threat from Kiev to siphon off for its own use some of the gas bound for western Europe through pipelines across its territory, supported UK prompt prices. The dispute, which was resolved on Wednesday, pushed up prompt prices again after a big drop on Monday following the reopening of an import terminal damaged by fire on February 28th. Although most supply contracts in Europe’s biggest and most liquid market are not directly linked to the price of oil, continental European supply deals are. The two-way gas pipeline between Britain and Belgium means that potential supply shortages in the rest of Europe from Russian flow cuts or oil-indexed gas price rises influence the UK too. Gas for delivery next winter hit 69.00 pence per therm early on Friday, up 2.90 pence from last week’s close and three pence from Tuesday’s settle.

Rocketing oil prices drove French power prices for 2009 delivery to new highs on Thursday while the German contract remained just under its latest record. The French Calendar 2009 baseload contract traded at 65.95 euros per megawatt hour, 5 cents above its previous record set on February 29th. The German equivalent baseload contract traded almost one euro higher on the day to 64.75 euros, but still 40 cents under its latest high of 65.15 on February 29th. European carbon emissions prices were fairly stable compared to last week as traders closed positions ahead of a major conference next week.December 2008 emissions permit prices also tracked oil closely, up almost three percent midweek when oil jumped on the back of tighter U.S. inventories.