(SINGAPORE) - Oil prices bubbled near 110 dollars in Asian trade Thursday within striking distance of a fresh record, buoyed by the falling US currency, dealers said.

Big investor demand for commodities to hedge against inflation and the weakening dollar were both boosting crude prices, which burst through 110 dollars per barrel for the first time on Wednesday, they said.

In afternoon trade, New York's main contract, light sweet crude for April delivery, was at 109.70 dollars per barrel, off 22 cents from its record closing high of 109.92 dollars in US trading hours Wednesday.

The contract had earlier Thursday briefly traded at an intra-day high of 110.12 dollars.

New York oil prices set an all-time trading high of 110.20 dollars on Wednesday before registering the record closing price of 109.92 dollars.

Meanwhile, London's Brent North Sea crude for April delivery eased 31 cents to 105.96 dollars on Thursday.

"Fundamentals are well and truly out of the window when it comes to oil prices," said Jan Lambregts, head of regional research at Rabobank in Hong Kong.

"A lot of money's obviously looking for a place to park and crude oil appears to be one popular destination among commodities in general," he said.

The ailing greenback has helped fuel the spike in world oil prices because crude is priced in dollars and becomes more affordable for purchasers holding stronger currencies.

The US unit slumped to a 12-year low against the yen and to a new all-time nadir versus the euro in Asian trade Thursday as investors bet on a hefty cut in US interest rates next week, dealers said.

The dollar dropped to 100.23 yen at one point while the euro briefly hit 1.5590 dollars, eclipsing its previous record high of 1.5570 set in New York on Wednesday.

Economists say the spike in world oil prices is boosting inflation, including in the US, which is struggling with other economic challenges and could already be in recession.

"Ultimately something's got to give. A US recession should provide enough of a cyclical headwind to see a near-term correction in crude oil prices," Lambregts said.

The correction could be "particularly vicious," he added.

Prices have blazed a record-breaking trail in recent weeks, smashing through 107 and 108 dollars in New York on Monday and 109 dollars Tuesday.

The International Energy Agency (IEA), which seeks to coordinate energy policy among the world's leading industrialised nations, said it would convene a meeting of oil industry experts to review the price spikes.

"There will be a meeting (Monday in Paris) on prices with experts, both from the financial and (oil) trading sectors, as well as with representatives of the production and refining sectors," an IEA spokeswoman told AFP.

Meanwhile, the US Department of Energy said Wednesday that US crude oil stocks had risen 6.2 million barrels last week, far above the gain of 1.7 million that most analysts had predicted.

Text and Picture Copyright 2008 AFP. All other Copyright 2008 EUbusiness Ltd. All rights reserved. This material is intended solely for personal use. Any other reproduction, publication or redistribution of this material without the written agreement of the copyright owner is strictly forbidden and any breach of copyright will be considered actionable.