Jan. 3 (Bloomberg) -- Crude oil traded near the record of $100 a barrel reached yesterday in New York on concern that violence in Nigeria may disrupt supply as global demand for commodities climbs.

Nigerian militants killed 12 people in the oil city of Port Harcourt on Jan. 1. Violence has curbed daily output in Africa's biggest oil producer by almost a quarter. Gold surged to a record yesterday as the dollar's slump against major currencies enhanced the appeal of commodities as a hedge against inflation.

``It was the violence in Nigeria that pushed prices up there, combined with the fact that a lot of the bigger players are back in the market after the holiday,'' said David Aleman, a senior analyst at Grand Central Trading Co. in Newport Beach, California. ``The market was looking for bullish reasons to keep going higher and this event fits the bill.''

Crude oil for February delivery traded at $99.40 a barrel, down 22 cents, in after-hours electronic trading on the New York Mercantile Exchange at 12:40 p.m. in Singapore. Yesterday the contract jumped $3.64, or 3.8 percent, to a record close of $99.62 a barrel after touching $100 a barrel earlier in the session, the highest since trading began in 1983. The exchange confirmed one floor trade at $100.

Oil, which rose 57 percent in 2007, also extended gains as traders expect a report today will show U.S. crude oil stockpiles dropped to a three-year low last week.

Energy Costs

Crude prices above $100 may bring energy costs near the tipping point that will cause global economic growth to falter. China has more than doubled oil use since New York crude dropped to this century's low of $16.70 a barrel on Nov. 19, 2001. That's soaked up most of the world's spare production capacity amid supply cuts in Nigeria, Iraq and Venezuela.

``We're talking about a commodity with a finite supply,'' said Adam Hewison, President of INO.com, an Annapolis, Maryland- based Web site that provides technical analysis and financial news. ``In the last decade we've seen China go from bicycles to BMW's. China and India will continue to ramp up their usage of crude, and that's the story of the next decade.''

Brent crude for February settlement was at $97.41 a barrel, down 43 cents, on London's ICE Futures Europe exchange at 12:33 p.m. Singapore time. Yesterday it rose $3.99, or 4.3 percent, to close at a record $97.84. Futures touched $98, the highest intraday price since trading began in 1988.

The dollar's 11 percent slide last year against the euro helped boost oil prices because it made commodities cheaper for buyers outside the U.S. and attracted investors seeking a hedge against inflation.

U.S. Dollar

The drop in the dollar and the jump in oil came as the biggest decline in U.S. manufacturing in five years sent the Dow Jones Industrial Average to its worst initial day of trading since 1983.

``Short-term, it's going to have a huge impact on the global macro-economic factors of inflation,'' said Steve Rowles, analyst at CFC Seymour Ltd. in Hong Kong.

The Organization of Petroleum Exporting Countries, supplier of more than 40 percent of the world's oil, kept its production targets unchanged at its last meeting Dec. 5, rebuffing calls by the U.S. to pump more oil. The group next meets Feb. 1.

``If I was OPEC and I had this asset in the ground, why would I want to sell it cheaply,'' said INO.com's Hewison. ``Why discount something that everybody needs?''

Inventories

U.S. crude oil inventories probably fell for a seventh straight week last week as refiners put off deliveries to the new year, a Bloomberg News survey indicated. Stockpiles probably fell 2.18 million barrels in the week ended Dec. 28 from 293.6 million, according to the median of responses by 12 analysts before a report later today from the Department of Energy's Energy Information Administration.

``In the very short term, the next day or two, the U.S. EIA data will be very important to the direction of oil prices,'' said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. ``If you do get a large decline in U.S. crude oil inventories relative to expectations, then it will be quite likely that the oil price will go through $100 a barrel.''

In Nigeria, Africa's biggest oil exporter, militants have attacked oil installations and kidnapped foreign workers since the beginning of 2006, forcing Royal Dutch Shell Plc to halt about 500,000 barrels a day of output, almost a quarter of the country's total.

Prices rose 2.9 percent last week partly because of the assassination of Benazir Bhutto, Pakistan's former prime minister. Pakistan borders Iran, which holds the world's second- biggest oil reserves, and is located along the Arabian Sea, where tankers travel before entering the Persian Gulf.

``The geopolitical issues are back on the table,'' said CFC Seymour's Rowles. ``Pakistan and Nigeria have created a situation where people wanted to buy.''

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net; Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net

Last Updated: January 2, 2008 23:58 EST