Oil prices jumped to an all-time trading high Monday in Asia as the tumbling US dollar and plunging stock markets prompted investors to seek shelter in commodities. Investors fled the dollar after a surprise move by the US Federal Reserve on Sunday to provide cash to financially squeezed Wall Street investment houses pushed the battered greenback deeper into multiyear lows against the yen. The Fed's move overall will help the liquidity of the US dollar, and that will really further soften the dollar," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "Meanwhile, investors seem to be just following the mantra of buying oil and commodities to hedge against the falling dollar and inflation." Light, sweet crude for April delivery spiked to a record US$111.42 a barrel - up $1.21 from Friday's close - in electronic trading on the New York Mercantile Exchange midmorning in Singapore. It later slipped back to US$111.10 a barrel. The contract's previous high was set Thursday at $111 a barrel. It fell 12 cents to settle at $110.21 a barrel on Friday. Analysts blame the weak dollar for oil's recent rally. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is weak. Interest rate cuts in the US further weaken the dollar and have helped drive oil's rise. In an extraordinary weekend move, the Fed cut its discount rate on Sunday by 25 basis points to 3.25 percent. The Fed is also expected to cut the benchmark federal funds rate at its regularly scheduled monetary policy meeting on Tuesday. "The inverse link between the dollar and oil prices seem to be strengthening. While we have new records for oil almost daily now, we're also seeing daily new record lows for the dollar," Shum said. Shum said the surge in investor demand for commodities as a hedge against inflation has created a self-fulfilling cycle that causes prices to keep rising. "When there is more liquidity, it will raise inflation. So investors pump more money into oil as a hedge, and that further fuels inflation," he said. "It points to the risk in the oil market that the fundamentals don't really support such continual strengthening in pricing." Equities investors also sought refuge from Asian stocks, which declined sharply Monday after the stunning collapse of Bear Stearns Cos., one of the world's largest investment banks. JP Morgan Chase & Co. agreed Sunday to buy Bear Stearns for US$236.2 million in a deal aimed at averting a Bear Stearns bankruptcy and a spreading crisis of confidence in the global financial system. But investors chose to see the move as a sign that fallout from problems in the US housing market is far from over.