Oil steadied near $109 (€70.87) a barrel today, within sight of its record high, supported by a strong European gas oil market and renewed weakness in the US dollar.
ICE gas oil, the European benchmark for heating oil and diesel, has been boosted by a deficit of diesel and hit a record high of $994.25 (€646.50) a tonne today. The March contract expires later in the session.
"The biggest influence seems to be short-covering in gas oil ," said Tony Machacek, an oil broker at Bache Commodities.
US crude rose four cents to $108.79 a barrel by 1055 GMT, coming off the record high of $109.72. London Brent was up one cent to $105.26, off an all-time high of $105.82.
US crude has hit record highs repeatedly in recent days as investors pour cash into oil and other commodities to hedge against inflation and the weak US dollar.
The dollar eased back towards record lows versus the euro today as a pick-up in risk appetite prompted by central bank moves to boost liquidity petered out.
Yesterday, the Federal Reserve and other central banks pumped more funds into the financial system, sending the dollar up against the yen and lifting it from a record low against the euro.
Later today, the focus will shift to the latest snapshot of oil supplies in the United States, the world's top consumer.