Oil prices hit new high before going into retreat

A weakening U.S. dollar on Monday helped propel the price of oil to another record high before crude went into retreat in afternoon trading

Oil for July delivery briefly touched $139.89 US a barrel in morning trading on the New York Mercantile Exchange. Oil rose as the U.S. dollar fell against the euro, the British pound and the Canadian dollar. The U.S. dollar was lower on a report of softer manufacturing in New York state, observers said.

However, after running up to its new high, oil later turned down, falling 25 cents from Friday's close to settle at $134.61.

Weakness in the U.S. dollar is pinpointed as a major factor in the rise in oil prices. A weak dollar makes it cheaper for investors using other currencies to invest in oil.

Oil and other commodities are used by investors as a hedge against inflation when the U.S. dollar loses ground.

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