Oct. 29 (Bloomberg) -- Crude oil climbed above $93 a barrel for the first time, extending this month's gain to 16 percent, after Mexico shut a fifth of its production and the dollar fell to a record low.

State-owned Petroleos Mexicanos, the third-largest supplier of crude to the U.S., halted about 600,000 barrels a day of output as a storm in the Gulf of Mexico closed platforms, spokesman Carlos Ramirez said in Mexico City. The dollar dropped to $1.4426 per euro, the weakest since the introduction of the 13-nation common currency in 1999.

Crude oil for December delivery rose as much as $1.34, or 1.5 percent, to an all-time high of $93.20 a barrel in after- hours electronic trading on the New York Mercantile Exchange. It was at $92.83 at 12:30 p.m. London time.

``You can't rule out a scenario of $100 a barrel,'' said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich AG in Vienna. ``Mexico shutting a fifth of production is fitting into a bullish scenario with people fearing stocks can't be brought up to necessary levels.''

Crude has rallied 52 percent this year as resilient demand has stretched global supplies, while threats to Middle Eastern output from political tensions have attracted speculative buyers. The flaring of disputes between Turkey and Iraq over Kurdish militants, as well as over Iran's nuclear program, prompted price records last week.

Gale Force

Gale-force winds from a weather system stretching from Florida to the Yucatan peninsula are whipping up 8-foot waves in the Gulf of Mexico, according to the U.S. National Hurricane Center.

``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.''

Mexico pumps about four-fifths of its 3.1 million barrels of daily crude production barrels it produces from the Gulf of Mexico, according to Petroleos Mexicanos, known as Pemex.

The company shut output of 200,000 barrels at noon New York time yesterday and was planning to idle wells that produce a further 400,000 barrels by midnight in Mexico, company spokesman Ramirez said. The wells would be closed until at least Oct. 30, Ramirez said, without elaborating.

The closure happened in the Bay of Campeche, the same area where 21 workers died after another storm last week caused an oil rig to hit a platform.

`Risk Premium'

``The size of the risk premium related to hurricanes and geopolitics is really huge,'' said Dariusz Kowalczyk, chief investment strategist with CFC Seymour Ltd. in Hong Kong. ``Speculators have become more emboldened over the last few weeks and are simply driving the prices of riskier assets higher.''

Brent crude oil for December settlement rose as much as $1.31, or 1.5 percent, to a record $90 a barrel on the London- based ICE Futures Europe exchange. It traded at $89.60 at 12:11 p.m. London time.

Crude is being supported by declines in the U.S. dollar, said Raiffeisen's Loacker. A weaker dollar makes commodities priced using the U.S. currency such as oil cheaper to foreign buyers. The dollar fell to its lowest against the euro on speculation the Federal Reserve will cut interest rates this week as a U.S. housing slump threatens economic growth.

Oil prices have passed the previous all-time inflation- adjusted record reached in 1981, when Iran cut exports. The cost of oil used by U.S. refiners averaged $37.48 a barrel in March 1981, the Energy Department said, or $84.73 in today's money. West Texas Intermediate crude adjusted for inflation touched a record $44.52 a barrel on Oct. 25, and was $44.06 on Oct. 26.

Wider Attacks

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.

On Oct. 26, the U.S. accused Iran's military of supporting terrorism and announced new sanctions on the country. The U.S. wants Iran to halt uranium enrichment that it suspects is a cover for developing nuclear weapons.

Hedge-fund managers and other large speculators decreased their net-long position in New York crude-oil futures in the week ended Oct. 23, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 60,026 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions fell by 27,972 contracts, or 32 percent, from a week earlier.

``That means some people sold futures for a profit,'' said CFC Seymour's Kowalczyk. ``It's a warning sign and there's a chance for a correction.''

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net

Last Updated: October 29, 2007 08:31 EDT