Oct. 29 (Bloomberg) -- Crude oil rose to a record $93.80 a barrel in New York after Mexico shut a fifth of its production and the dollar fell to a record low.

State-owned Petroleos Mexicanos, or Pemex, halted about 600,000 barrels a day of output as a storm passed through the Gulf of Mexico, spokesman Carlos Ramirez said in Mexico City. Early today, the dollar dropped to $1.4377 per euro, the weakest since the introduction of the 13-nation common currency in 1999.

``Any bullish headlines are fair fodder for the market at this time,'' said Antoine Halff, the head of energy research at Fimat USA Inc. in New York. ``The Mexicans shut-in a great deal of production, spurring buying today.''

Crude oil for December delivery rose $1.67, or 1.8 percent, to settle at a record $93.53 a barrel at 2:46 p.m. on the New York Mercantile Exchange. Futures climbed to $93.80, the highest intraday price since trading began in 1983.

Brent crude oil for December settlement rose $1.63, or 1.8 percent, to settle at a record $90.32 a barrel on the London- based ICE Futures Europe exchange. Brent reached $90.49, the highest since trading began in 1988.

The oil market ``may be only one or two events away from'' $100-plus oil, Daniel Yergin, chairman of Cambridge Energy Research Associates, said in remarks prepared for a conference today at Georgetown University.

Gale-Force Winds

Gale-force winds from a weather system between Florida and the Yucatan peninsula are whipping up 8-foot waves in the Gulf of Mexico, according to the U.S. National Hurricane Center. There are no named tropical storms in the Gulf, and one near Cuba, called Noel, is expected to twist northwards and avoid the Gulf.

At least 21 workers died when a rig hit an offshore platform in the Gulf of Mexico during a storm that produced waves as high as 26 feet and wind gusts of 81 miles per hour on Oct. 23.

``That's pretty strong for the Gulf,'' said David Salmon, a forecaster at Weather Derivatives Inc. in Belton, Missouri. ``It's showery and stormy over the oil production area. There's probably some nervousness lingering from the last storms they had, as well as strong winds, precipitation and eight-foot waves.''

The U.S. imported an average 1.45 million barrels of crude oil a day from Mexico during the first eight months of the year, making the country the second-biggest source of U.S. imports, according to the Energy Department.

Lingering Nervousness

The dollar fell on speculation the Federal Reserve will cut borrowing costs on Oct. 31. A lower dollar makes oil relatively cheaper in the countries using other currencies. In U.S. dollars, West Texas Intermediate, the New York-traded crude-oil benchmark, is up 53 percent so far this year. Oil is up 40 percent in euros, 45 percent in British pounds and 47 percent in yen.

``Crude oil is forming a bubble that's waiting to pop,'' said Bernard Isler, director of research at Trendex Commodity Corp. in Plantation, Florida. ``When crude pops you may see some dramatic moves to the downside. It may be at $100 when that happens, but there's no other fundamental news to keep it there.''

Tensions between Turkey and Iraq over Kurdish militants as well as over Iran's nuclear program have helped drive oil prices higher. Iran and Iraq hold the world's second and third-biggest crude-oil reserves, after Saudi Arabia, according to BP Plc.

``What we're seeing in the oil market today is rooted more in the cauldrons of geopolitics and the impact of financial markets, expectations and psychology than in supply and demand,'' said Yergin, whose book ``The Prize: The Epic Quest for Oil, Money & Power,'' won the Pulitzer Prize.

Turkish Prime Minister Recep Tayyip Erdogan warned Oct. 27 that his country may order wider military attacks against militant camps, if needed, according to Turkish media. Turkey said it bombed PKK units in northern Iraq last week and sent troops across the border in pursuit of the militants.

`Bullish Stuff'

``There's a lot of bullish stuff out there,'' said Rick Mueller, an analyst with Energy Security Analysis Inc. in Wakefield, Massachusetts. ``The Turks may invade northern Iraq at any time and it doesn't look like Iran and the U.S. will be getting together to sing Kumbaya anytime soon. We need to see more output from OPEC before prices retreat.''

Cold weather in the U.S. Northeast pushed heating oil to a record. Heating oil for November delivery rose 3.21 cents, or 1.3 percent, to close at a record $2.4646 a gallon in New York. Futures touched $2.472, the highest since trading began in 1978.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

Last Updated: October 29, 2007 15:40 EDT