Oil prices rose by more than $1 a barrel to over $123 tonight, extending further into record territory as worries over supplies of diesel outweighed a boost in US reserves of crude.
US crude leapt $1.49 to $123.33 a barrel after hitting an all-time peak of $123.56. London Brent rose $1.84 to $122.15. Crude prices have now doubled in a year.
The latest rally came after a US government report showed a decline last week in distillate stockpiles - which include diesel and heating oil. This brought reserves in this area nearly 13% below a year ago.
Power supply tightness in China, South Africa, Chile, Argentina, and parts of the Middle East have triggered a worldwide boom in demand for diesel for use in electric generators, adding to demand for use in Europe's passenger vehicle fleet.
The report from the US Energy Information Administration also showed an increase in US crude oil stockpiles of 5.7 million barrels and an increase in petrol supplies of 800,000 barrels, limiting the market's gains.
The advance in crude oil prices to fresh highs came a day after investment bank Goldman Sachs said oil prices could scale $200 a barrel in the next two years.
The head of the state run company of OPEC member Libya also said oil prices were likely to rise further amid continued investor interest in commodities and simmering global political tensions. Shokri Ghanem, head of Libya's National Oil Corp, was speaking to the Reuters news agency.
Traders remained concerned about supply disruptions in Nigeria, despite the end last week of a strike which halted Exxon Mobil output in the West African country.
