Oil surges to a record US$ 132

US: Oil stormed to new record highs above $132 a barrel yesterday, stoking fears of global inflation and undermining equity markets that have recently been erasing their 2008 losses.

A bullish economic outlook for Germany lifted the euro to a one-month high against the dollar.

The dollar's fall means more of the weaker U.S. currency is needed to buy a barrel of oil. Oil prices surged more than $3 to a record intraday record of $132.08, reaching its high after weekly data from the U.S. Government showed stocks of crude had fallen by 5.4 million barrels.

While equities were mostly undermined by rising oil and inflation pressures, energy heavyweights Chevron and ConocoPhillips hit lifetime highs.

While previous price spikes have been triggered by supply disruptions, demand from top consumers the United States and China is a main driver of the current rally. Global demand growth has slowed after a surge in 2004 but is still rising and higher prices have so far had a limited effect on economic growth.

Analysts say the world is coping with high nominal prices because, adjusted for exchange rates and inflation, they have been until recently lower than during previous price spikes and some economies have become less energy intensive. The Organization of the Petroleum Exporting Countries, source of more than a third of the world's oil, started to reduce oil output in late 2006 to stem a fall in prices. Reuters, ABC News