NEW YORK, May 22: Oil prices pulled back from a record $135 a barrel on Thursday as dealers took profits from a dazzling rally and a recovering US dollar dampened all commodities markets.

US crude dipped $1.20 to $131.97 a barrel by 1723 GMT after jumping earlier in the session to a record $135.09. London Brent crude fell 91 cents to $131.79 after touching a peak of $135.14.

“Some people had set a target of $135 as part of their investment strategy and once that price was achieved have started taking some profits,” said Phil Flynn, analyst at Alaron Trading in Chicago.

Dealers also noted selling across other commodities markets as the dollar recovered on a drop in US jobless claims.

The pullback came after crude rallied more than 30 per cent since the start of the year, driven by worries about tight stocks of refined products in the near term and mounting global demand over the longer term.

Oil has risen sixfold since 2002, propelled by rising consumption in China and other developing countries.

Oil prices had surged on Wednesday after US weekly data showed crude stocks declined by 5.4 million barrels. Analysts had expected an increase.

“The combination of increasing demand and constricted supply will continue to keep oil prices strong,” Robin Batchelor, manager of BlackRock’s BGF World Energy fund, said in a research note.

Concerns about long-term supply tightness have also recently pushed prices for future delivery even higher than prompt contracts. December 2016 US crude reached $145.60 a barrel, making it the loftiest contract on the futures curve.

The United States has repeatedly called on the Organization of the Petroleum Exporting Countries (Opec) to boost its output to try to calm markets, but the group has said no increase is needed.—Reuters