Oil briefly spurts near $104 a barrel

— -- Oil prices rampaged above $100 a barrel all day Monday, setting an intra-day record of $103.95 and closing at a near-record $102.45.

The high prices were mainly driven by investors putting money into commodities instead of holding onto declining U.S. dollars, which dropped again on Monday.

"If it were just about supply and demand, oil would not be at $100," says Phil Flynn, oil analyst at Alaron Trading in Chicago. "The price of oil and gasoline is being re-evaluated against the weakening dollar, and oil is being used as a hedge against inflation."

Reinforcing the point: Commodities gold and silver, seen as key havens, both were up at the close of Monday trading on the New York Mercantile Exchange. Prices of agriculture commodities wheat and corn rose in trading at the Chicago Board of Trade.

The dollar's value was down against the euro and the Japanese yen on Monday, compared with Friday's value, meaning it took less in euros or yen to buy $1.

Since oil is priced worldwide in dollars, "A lower dollar means that it's easier for people in other countries to buy oil," notes Peter Beutel, president of energy consultant Cameron Hanover.

The rise could bring more increases in already expensive diesel fuel and heating oil. Gasoline prices, though, might have caught up to high-price oil and be in neutral temporarily.

The U.S. average price for gasoline has hovered around $3.16 a gallon the past four days and might not rise much until mid-March, says Tom Kloza, analyst at Oil Price Information Service, a consultant. He forecasts a peak average of $3.50 to $3.75 for gasoline this year, well above the OPIS record of $3.227 on March 24.

Diesel, however, continues to set daily records. It averaged $3.674 Monday, according to OPIS data from more than 85,000 fuel stations, published by travel organization AAA. Diesel powers shipping and delivery vehicles, boosting the costs of getting products to market. That can result in higher retail prices.

"Diesel's the one that's more insidious with inflation," Kloza says.