A report from the International Energy Agency said Russian oil production dropped this year for the first time in a decade. Crude oil shipments along one U.S. pipeline were said to be moving below capacity. And Italy's ENI reported a 5,000 barrel per day reduction in production at one of its facilities in Nigeria.

Light, sweet crude for May delivery on the New York Mercantile Exchange rose as high as $113.66 a barrel by afternoon in Europe before backing off. That was $1.45 above the previous record set last week.

The contract closed at a record settlement price of $111.76 a barrel on Monday.

The recent run above $100 a barrel has been largely attributed to a steadily depreciating U.S. currency because a weakening dollar prompts investors to seek a safe haven in hard commodities such as oil and gold.

"We've seen another swing down in the U.S. dollar so I think we saw short term traders go back into oil as a hedge against the falling dollar," said Mark Pervan, senior commodity strategist at the ANZ Bank in Melbourne, Australia.

Stephen Schork, in his Schork Report, described the rush into oil on the falling dollar as an automatic reflex.

"Traders on the Nymex saw the dollar take another tumble, so they did what they have been conditioned to do when the dollar falls, i.e. they bought crude oil," he wrote.

Monday's news from the U.S. banking company Wachovia Corp. supported oil prices by making the U.S. dollar less attractive, said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

Wachovia, the fourth largest bank in the U.S., reported a hefty first-quarter loss and cut its dividend, and said it was forced to seek a $7 billion cash injection to make up for a poorly timed expansion of its mortgage business.

"This news highlights the strains in the banking sector and credit markets and that has led to more dollar selling, and so that tends to drive investors into oil and other commodities," Shum said.

He said the news from Wachovia as well as disappointing first-quarter results from General Electric Co. on Friday overshadowed concerns raised by the Group of Seven industrialized nations about the dollar's fall. The G-7 remarks were seen as a warning by some analysts that the group may be contemplating an intervention that could lessen crude's attraction as an inflation hedge and send it lower.

The report from the International Energy Agency - the Paris-based energy watchdog for industrialized countries - said Russia, the world's biggest oil exporter after Saudi Arabia, averaged 10 million barrels per day from January through March, down 1 percent from 2007 and the first time production has failed to exceed previous-year figures since 1998.

Artyom Konchin, an analyst with Aton Capital, put Russia's oil supply lull down to high taxes and insufficient reinvestment into infrastructure that could increase production from existing fields.

"It's not that we don't have enough oil," he said. "We just don't have enough capital going into developing the fields."

Konchin said the fact that Russian oil accounted for roughly 12 percent of world supply makes this year's production drop "not particularly significant."

Crude was also supported by news of disruptions to crude supplies, though analysts said the interruptions were minor.

"They only look like temporary shut downs but ... the combination of that and the fact that the dollar was off again was the key," Pervan said.

The Capline pipeline - the Royal Dutch Shell PLC conduit that carries 1.2 million barrels of crude each day from the U.S. Gulf Coast to the Midwest - was closed on the weekend, and has since resumed operations at a slightly reduced capacity.

In Nigeria, Italian energy giant ENI reported a 5,000 barrel per day reduction in production at one of its facilities.

In other Nymex trading, heating oil futures surged by over 5 cents to sell for $3.255 gallon while gasoline prices rose by nearly 4 cents to $2.8608 a gallon. Natural gas futures spiked more than 16 cents to $10.22 per 1,000 cubic feet.

---

Associated Press Writer Gillian Wong contributed to this report from Singapore.

© 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy.