Mumbai: Crude oil prices rose above $103 a barrel for the first time, aided by a weak dollar and the prospect of excess liquidity driven by lower US interest rates.

Light, sweet crude for April delivery jumped to a record $103.05 a barrel in Asian electronic trading on the New York Mercantile Exchange before edging back to $102.79 a barrel, up 20 cents.

The contract had jumped $2.95 to a record $102.59 a barrel on Thursday.
 
Crude prices are within the range of inflation-adjusted highs set in early 1980. A $38 a barrel of oil then would be worth $97-$104 or more at current levels, depending on the how the adjustment is calculated.

Nymex heating oil rose 0.82 cent to $2.8538 a gallon while natural gas futures added 0.1 cent at $9.444 per 1,000 cubic feet.

In London, Brent crude futures rose 9 cents to $100.99 a barrel on the ICE Futures exchange.

Oil prices were supported by comments by Federal Reserve chairman Ben Bernanke, that the American economy is not immediately threatened with stagflation.

Investors expect the Fed to continue a soft money policy and continue cutting interest rates in a bid to shore up the economy.

Crude oil and other commodities offer a hedge against a falling dollar as lower US interest rates weaken the dollar further.

Meanwhile, the Organisation of Petroleum Exporting Countries, meeting on March 5, is likely to decide to keep current production levels, or even cut production, as according to OPEC, oil inventories were growing.

OPEC attributes the current rally in oil prices to the US dollar's weakness and speculative trades amid geopolitical risks.