Oil rose to a new record near $130 a barrel on Tuesday, driven by yet more bullish price forecasts from investment banks and influential US oil investor T Boone Pickens.

The market was also spurred by tight supplies of refined products, especially diesel ahead of the US driving season and amid strong Chinese demand, besides a weak dollar.

US light crude's June contract, which expires later on Tuesday, rose to an all-time high of $129.58 a barrel and by 1441 GMT was trading was $2.20 higher at $129.25.

London Brent crude was up $2.49 at $127.55. ICE gas oil futures rallied more than 2.5 percent to a record of $1,238.75 a tonne.

"The middle distillates market remains a very strong performer on a global scale, that market is very tight and is performing well," said Eric Wittenauer at Wachovia.

The market drew fresh impetus after Pickens said he expected oil prices to reach $150 a barrel this year.

Investment banks Societe Generale and Credit Suisse raised their oil price forecasts for 2008 by $14 to $115 a barrel and by $29 to $120 respectively.

Already, last week, the most active investment bank in the energy markets Goldman Sachs had helped to push oil to a record above $127 a barrel when it predicted oil prices would average $141 in the second half of this year.

Away from the headline-grabbing forecasts, analysts say oil markets have been underpinned by tight fundamentals, especially for refined products.

Tight supplies have come under increasing strain following last week's earthquake in China, which disrupted natural gas supplies and increased demand for diesel to be used in electric generators.

For the latest data on the supply-demand balance, markets are awaiting US inventory data for release on Wednesday. It is expected to show a rise in US distillate stocks, as well as small increases in gasoline and overall crude stocks, according to a Reuters poll of analysts. -Reuters