Oil surges higher on dollar, heating fuels

LONDON (Reuters) - Oil prices set new record highs on Monday, propelled by gains in oil product prices and dollar weakness which also spurred a rally in gold and other commodities.

Expectations OPEC will not change oil output when it meets this week in Vienna underpinned the market.

U.S. light crude for April delivery was up $1.56 at $103.40 a barrel by 1531 GMT (10:31 a.m. EST), after a record of $103.95.

London Brent crude was $1.52 up at $101.62 a barrel, after touching a record of $102.29.

London gas oil futures (heating fuel) shot to a new record of $940 a ton, reflecting historically low levels of inventories in Europe.

A fall in the U.S. dollar to record lows against the euro helped attract investment money into oil and other commodities.

Crude oil is priced in U.S. dollars so when the U.S. currency declines, oil prices often rise to reflect that.

"From an oil perspective, this rally, like that across the commodity sector, remains rampant as funds/specs continue to seek safer havens from an ailing equity market," said Robert Laughlin, analyst at broker MF Global.

Crude speculators on the New York Mercantile Exchange increased net long positions last week to the highest in seven weeks, according to data from the Commodity Futures Trading Commission released on Friday.

The weak dollar is anticipating more interest rate cuts from the U.S. Federal Reserve to revive the economy in top oil consumer the United States.

"Coupled with a weaker dollar environment, increased liquidity is conducive of further investor allocations into oil, where nominal gains (compared to other dollar denominated assets) appear to hold greater potential," said Harry Tchilinguirian, oil analyst at BNP Paribas.

OPEC ROLLOVER