Oil smashed past $135 a barrel for the first time Thursday, continuing its astonishing rise following

unexpected declines in U.S. crude and gasoline stocks in a tight market.

Large institutional investors continued to pile money into oil, which is giving better returns than investments in stocks and bonds, further heating up prices, traders said.

The Commonwealth Bank of Australia said in a market commentary that the 'oil price also

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benefited from further U.S. dollar weakness.'

New York's main oil futures contract, light sweet crude for July delivery, briefly rose to a high of

$135.04 a barrel before easing to $134.59 in Asian afternoon trade, up $1.42 from its U.S. close.

The benchmark futures contract closed more than $4 higher at a record $133.17 on the New

York Mercantile Exchange, and continued its upward spiral in after-hours electronic trade.

London's Brent crude contract for July was also busting records, rising to a high of $134.50 before pulling back to trade at $134.36, smashing its intraday peak of $133.34 set a day earlier.

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