U.S. crude settled up $2.75 at $107.90 a barrel, off a record $108.21 hit earlier in the session. London Brent crude jumped $1.78 to settle at $104.16 a barrel.
Fears of a U.S. recession following the biggest U.S. job losses in five years and strains in the credit market have sunk the dollar and raised expectations the Federal Reserve could cut interest rates again to prop up the economy.
Speculators have rushed into commodities to hedge against the weaker dollar as well as prospects that further Fed rate cuts could fuel inflation, helping to lift oil to average over $95 so far this year despite signs the faltering U.S. economy is crimping energy demand.
The dollar tumbled against the yen on Monday as fears of a U.S. recession hit stock prices.
A fall in U.S. crude oil inventories reported in government data released last week and OPEC's decision on Wednesday to hold supplies steady have also boosted prices.
OPEC President Chakib Khelil was quoted on Monday as saying speculation and political tension would keep prices at triple digits through the year, and some analysts are adjusting their forecasts higher.
Cartel officials insist that speculators are driving up oil prices and that supply and demand fundamentals do not support current levels.
Khelil said prices could retreat in 2009 with a recovery of the U.S. dollar following the election of a new U.S. president and as fundamentals reassert themselves.
OPEC will next meet in September, although ministers could confer informally at a conference between consumers and producers in Rome on April 20-22.