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Crude’s rally mimicked the wild price swings seen in conclusion month and at least temporarily halted oil’s move smoothly back toward $100 a barrel. A weaker U.S. dollar and worries about tightening output from OPEC countries are besides supporting prices.

After days of brushing off geopolitical flare-ups and a tropical storm, oil spiked above $122 a barrel as traders became rattled over increasingly repugnant Russian rhetoric toward a U.S.-Poland deal to introduce into office a missile defense body in Eastern Europe — a move Moscow views as a threat.

The continued presence of Russian troops in Georgia — a key tube for Western-bound oil shipments — injected even more bullish disposition into a market that had appeared to be loss momentum on the archetype that high energy prices were curbing demand.

Oil watchers said the market’s sudden reaction to the standoff reflects a growing acknowledgment of Russia’s bear-like influence over world energy supplies.

“People are finally realizing that this Russian situation has the potential to be disappointing for a excessively long time,” said Addison Armstrong, director of place of traffic research at Tradition Energy in Stamford, Conn. “The Russians have shown evidence that they’re willing to cut off energy supplies to advance their aims. There is concern that they are now going to be much more assertive in that area.”

Light, sweet uncooked for October delivery jumped $5.62 to settle at $121.18 a barrel on the New York Mercantile Exchange afterward earlier rising as high as $122.04, crude’s highest trading level since Aug. 4. Crude prices have steady higher according to three straight sessions. In after-market trading, prices rose $6.17 to $121.72 a barrel.

Crude’s rally lifted other commodities, with everything from gold to large boiler to heating oil trading sharply higher.

Russia is the earth’s helper largest oil exporter after Saudi Arabia. It stores a quarter of the European Union’s oil and half of its natural aeriform fluid. If those shipments were cut facing, EU countries would be unnatural to seek supplies elsewhere at a adapt to the occasion when spare crude containing power is before that time stretched to an extremely skinny margin of about 2 million barrels per light of day, analysts say.

“If military activity heats up again, pipeline flows into Europe could be disrupted and that would assume the United States as well,” said Jim Ritterbusch, president of animation consultancy Ritterbusch and Associates in Galena, Ill.

The price jump came as deal out in small portions gas prices continued to fall, shedding more than a penny overnight to a new public average of $3.702, according to auto club AAA, the Oil Price Information Service and Wright Express. Prices have now fallen 10 percent from record highs above $4 a gallon collection July 17, but the pace of the drop off could slow whether or not oil holds onto Thursday’s gains.

“This is probably about it in provisions of a deal out in small portions gas drop. We may subsist a scarcely any cents from home from the August bottom,” said Tom Kloza, publisher and chief analyst at the Oil Price Information Service in Wall, N.J.

Prices were supported Thursday by a weaker dollar compared to the euro. The 15-nation money; aggregate of coin rose to $1.4874 in afternoon mercantile in New York from $1.4768 late Wednesday. A falling greenback encourages investors to seek commodities such as oil as a hedge against self-importance and a weaker dollar.

“The glide in the dollar has taken more of the wind out of the bear’s sail in the energy complex,” oil analyst and trader Stephen Schork said in a note.

Oil’s arise came despite a huge increase in U.S. crude inventories reported Wednesday. But other supplies were less abundant.

Gasoline inventories shrank by a larger-than-expected 6.2 million barrels to below-average levels in the week ended Aug. 15, the U.S. Energy Department’s Energy Information Administration reported Wednesday. Meanwhile, distillate inventories — which include heating oil and diesel firing material — rose by means of less than expected, the EIA said.

But growing concerns over Russia’s standoff with Georgia and NATO grabbed the attention of greatest number oil traders Thursday.

On Wednesday, Secretary of State Condoleezza Rice and her Polish counterpart signed a deal to build an American missile defense base in Poland. Last week, a top Russian general warned Poland was risking an attack, possibly a nuclear one, by developing the base.

JBC Energy in Vienna said the “political risk premium of oil prices” had widened to more than $10 a barrel, which could be attributed at least in part to the Russian divergence.

Investors are also anxious about the next Organization of the Petroleum Exporting Countries meeting in early September. Venezuelan Oil Minister Rafael Ramirez before-mentioned he might propose an output divide at the next OPEC concourse.

U.S. energy consultancy Cameron Hanover noted in its daily market report that some members of the oil collection were “terrified of allowing Western countries to build any complacent of cushion for the unexpected, because it has the possible to return prices to normal or sustainable economic levels” and interfere with OPEC’s might to keep building bulky extraneous currency reserves.

Oil prices have rebounded after falling about $35, or nearly a quarter, from their all-time trading record $147.27 on July 11. Many investors await that high gasoline prices and slowing housekeeping growth in the U.S., Europe and Japan will mine global energy demand.

In other Nymex trading, heating oil futures rose 13.71 cents to settle at $3.3006 a gallon, while gasoline prices gained 13.49 cents to settle at $3.0452 a four quarts. Natural gas futures increased 17.5 cents to settle at $8.252 per 1,000 cubic feet.

In London, October Brent in a raw state rose $5.80 to settle at $120.16 a barrel. Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.