Oil is priced in dollars and when the US currency weakens, it essentially makes crude cheaper.

Benchmark crude for April delivery surged US$3.26 to US$51.40 (S$77.46) a barrel in light trading on the New York Mercantile Exchange. Oil prices hit US$52.25 earlier in the day, a price last seen on Dec 1.

With the April contract set to expire Friday, most of the trading had shifted to the contract for May delivery. Crude prices on the May contract jumped US$3.17 to US$52.07 a barrel.

Analysts said investors flocked to crude stocks after the Federal Reserve announced late Wednesday it would buy long-term government bonds, a measure that's expected to jolt the economy with lower rates on mortgages and other consumer debt.

The Fed also said a US$1 trillion program to jump-start consumer and small business lending could be expanded to include other financial assets.

'You're seeing wild swings in a lot of commodities today,' said Phil Flynn, analyst at Alaron Trading Corp. 'The government is basically printing money to buy back all this paper, and it devalues the dollar.' The US dollar dropped against other major currencies on Thursday morning. The euro traded at US$1.3542, up from US$1.3424 late on Wednesday.

Mr Flynn said the rise in oil shouldn't be taken as a sign that the economy in on the mend. The Fed is using all of its powers to prop up American businesses, 'and this is one of their last shots,' Flynn said. 'If this doesn't work, they're out of bullets.' The jump in oil comes despite a government report on Thursday that said jobless claims set a new record for the eighth straight week.

The Labor Department said continuing claims for unemployment insurance jumped 185,000 to a seasonally adjusted 5.47 million, another record-high and more than the roughly 5.33 million that economists expected. -- AP