Traders are watching developments on the Turkish border
US light sweet crude rose $3.36 to $90.46 a barrel by close of trade in New York, having traded as high as $90.60 earlier in the day.
Meanwhile London Brent closed $3.11 higher at $87.48,
Tensions along the Iraqi border between Turkey and Kurdish rebels have also played a part in the price rally.
US crude oil stocks fell by 5.3 million barrels last week, government data showed, when analysts had been expecting a rise in inventory.
Prices had retreated from last week's high, after concerns about the health of the US economy and expectations of more output from Opec.
A weaker US dollar makes oil a more attractive investment for holders of other currencies.
Despite the surge members of oil producing cartel Opec said they would stick to existing production targets.
The group has already said it would increase production by 500,000 barrels a day starting from 1 November, but the US is calling for an additional rise.
Eric Wittenauer of AG Edwards said: "I think this is a continuation of yesterday's rally off the surprisingly bullish inventory release."
Since the start of 2002, oil prices have increased more than four-fold, and in the period since January, the rise has been around 45%.
Oil has risen to a new all-time record high during trading in Asia, passing US$91.10 at 10:23 p.m. on October 25 (eastern time).

In electronic trading at the NYMEX Crude Futures in the United States touched a record price of, at US$92.22, according to ''Bloomberg'', setting another record all-time high. On the IntercontinentalExchange Brent Crude futures reached US$89.30 (basis December) as of 8:34 a.m..

NYMEX Crude closed at $91.86, while ICE Brent closed at $88.69, at the conclusion of Friday's trading.

The raise come when the United States announced that it had an "unexpected loss" in the nation's stockpile of oil. The fear that Turkey may launch a large scale attack on Kurdish Militants inside Iraq is also being blamed for the raise in prices and the U.S. imposed more sanctions on Iran for continuing to enrich uranium.

Australia's Commonwealth Banks states that the raise is "being supported by an increase in geopolitical tensions and also market developments. The US has announced that it is imposing new sanctions on Iran, Oil markets also continued to have an eye on developments related to the current tensions between Turkey and Kurd rebels in Iraq."

OPEC has agreed that by November 1, 2007, they will increase the amount of barrels of oil they produce by 500,000 barrels a day. The U.S. says that they would like that number increased.