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LONDON - Oil sped above $98 a barrel for the first time on Wednesday, closing in on the landmark $100 level, driven by a slumping U.S. dollar and worries over a winter fuel supply crunch.

Analysts said it was only a matter of time before oil hit triple digits, with evidence of tightening stocks aiding a nearly 8 percent rise over the past two weeks alone.

"We're going to get $100 before too long," said Kevin Norrish of Barclays Capital.

U.S. crude rose $1.42 by 6:24 a.m. EST to $98.12 having earlier hit a record $98.62. London Brent crude also hit a new peak of $95.19, and was later up $1.27 at $94.53.

Investors, wary of global equity markets where the full blow of the credit crunch has yet to be felt, see commodities as a sure bet. Since mid-August, oil has soared nearly $30 and gold is at a 28-year high.

Record weakness in the U.S. dollar has also helped to fuel oil's rally, as investors see dollar assets as relatively cheap.

Oil gained momentum on Wednesday after the U.S. dollar plumbed to new lows against the euro as credit market turmoil kept alive the prospects of another Federal Reserve rate cut.

The surge brings oil within a hair of the inflation-adjusted record peak of $101.70 hit in 1980 when war between OPEC producers Iran and Iraq ignited an oil supply crisis.

This time round, demand -- fuelled by exploding growth in China and a steady increase from the United States -- has been a major driver behind a more-than-quadrupling in the oil price since 2002.

NEW ENERGY ORDER