June 27 (Bloomberg) -- Crude oil rose above $142 a barrel for the first time as falling stock markets spurred investment in commodities.

Oil has climbed 46 percent this year as the U.S. dollar declined against the euro and the MSCI World Index of global equity markets dropped 12 percent. Oil may extend gains if the European Central Bank boosts rates on July 3, further weakening the U.S. currency.

`The trend to hard assets, and energy in particular, is unabated,'' said John Kilduff, vice president of risk management at MF Global Ltd. in New York. ``There's a lack of confidence in stocks and other markets right now, which has investors looking for safe havens.''

Crude oil for August delivery rose 57 cents, or 0.4 percent, to settle at $140.21 a barrel at 3:05 p.m. on the New York Mercantile Exchange, a record close. The August contract rose $4.85, or 3.6 percent, this week.

Prices, which are up 38 percent this quarter, are heading for the biggest quarterly gain since the first three months of 1999, when oil traded between $11 and $17.

``This market is very volatile,'' said Justin Fohsz, a broker at Starsupply Petroleum, a division of GFI Group Inc. in Englewood, New Jersey. ``Prices fell from almost $143 to $140 between 2:00 p.m. and 2:30 p.m. on nothing. There's very little volume, which makes it a lot easier to move the market.''

Futures advanced to $142.99 at 1:58 p.m. today, the highest since trading began in 1983.

Yesterday, the contract jumped $5.09, or 3.8 percent, to $139.64 a barrel as Libya threatened to cut output and the president of the Organization of Petroleum Exporting Countries said prices may reach between $150 and $170 within months.

Continuing Rally

``I don't know when this rally will end because there are too many folks in the finance community betting on prices to rise,'' said Rick Mueller, director of oil practice at Energy Security Analysis Inc. in Wakefield, Massachusetts. ``Gains have nothing to do with the physical market.''

The Standard & Poor's 500 Index declined 13 percent so far this year to 1,280.13. The Dow Jones Industrial Average dropped 14 percent to 11,366.22 during the same period.

Brent crude oil for August settlement rose 48 cents, or 0.3 percent, to settle at a record $140.31 a barrel on London's ICE Futures Europe exchange. Futures earlier climbed to $142.97, the highest intraday price since trading began in 1988.

Refinery Repairs

BP Plc shut a crude-oil unit for repairs at its Dutch refinery, Europe's second-largest, cutting fuel production, two people familiar with the work said.

Repairs to one of the two crude distillation units at the 400,000 barrel-a-day plant in Rotterdam are scheduled to begin this weekend and last until about July 19, the people said, declining to be named because the information is confidential. BP spokesman Robert Wine in London couldn't immediately comment.

The UBS Bloomberg Constant Maturity Commodity Index, which tracks 26 raw materials, rose as much as 1.1 percent to a record 1683.928 today. Corn reached a record, and rubber advanced to a 28-year high.

Gold had a second weekly gain as the dollar weakened, boosting the appeal of the metal as a hedge against inflation. Gold for August delivery rose $16.20, or 1.8 percent, to $931.30 an ounce in New York.

ECB President Jean-Claude Trichet reiterated in a June 25 speech that policy makers may increase the main refinancing rate by a quarter-percentage point next month to contain inflation. The Federal Reserve left the benchmark U.S. rate at 2 percent on June 25. On Sept. 18 the Fed began cutting rates to bolster an economy already reeling from a credit crisis.

``The Fed, in the eyes of oil traders, didn't do enough to bolster the value of the dollar,'' said Addison Armstrong, director of market research at TFS Energy LLC in Stamford, Connecticut. ``What the ECB does in a few days will have a big impact on the dollar and oil.''

The dollar was little changed at $1.578 per euro as of 3:22 p.m. It fell to $1.6019 on April 22, the lowest since the euro's debut in 1999.

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

Last Updated: June 27, 2008 17:16 EDT