NEW YORK, June 6: Crude oil crossed $137 a barrel Friday for the first time in New York and London trade, jumping more than $9 as the market reacted to a sharp decline in the dollar.

New York’s main oil futures contract, light sweet crude for July delivery, touched an all-time high of $137.70 a barrel, up by $9.91 from Thursday’s close.

That far outstripped its previous all-time peak of $135.09 struck on May 22.

In London, Brent North Sea crude for July jumped $9.81 to strike a record high $137.35 a barrel, surpassing its prior record of $135.14, also hit on May 22.

Both futures contracts eased back after hitting the new record peaks.

The weakening dollar boosts oil prices because it makes crude relatively cheaper for buyers using other currencies, analysts said.

Crude oil had soared more than $5 on Thursday as the market rebounded strongly from losses earlier this week.Oil prices rallied on Friday, “extending gains from the day before on heavy losses in the dollar,” said analyst Andrey Kryuchenkov at the Sucden brokerage in London.

“It seems that many investors used the latest sell-off in the dollar as an excuse to get back into the market after a bout of profit taking.”

Prices pushed sharply higher on Friday after Morgan Stanley analyst Ole Slorer said he expected strong demand in Asia could drive prices to $150 by Independence Day (July 4), when millions of Americans are expected to take to the roads.

Shipments from the Middle East are mimicking patterns seen in the third quarter last year, when Morgan Stanley based its ‘’oil price spike’’ predictions on falling supplies in the Atlantic, he said.

’’We made the same call using the same parameters, but now we are starting from much lower inventory levels,’’ Slorer said.

’’We had a rally of something like $12 in about 24 hours. It makes no fundamental sense,’’ said Stephen Schork, an analyst and trader in Villanova, Pennsylvania. ‘’With oil pushing back up to the mid-$130s, it’s the make it or break it point. If we go past that, we set the course for uncharted waters and head up toward $150.’’

The dramatic reversal in what had been a weakening oil market began on Thursday after ECB President Jean-Claude Trichet suggested the bank could raise interest rates.—Agencies