Oil hit a record high near $125 a barrel on Friday, boosted by strong demand for diesel fuel, concern about supplies and a renewed bout of buying by investment funds.

US crude oil traded at $124.74, 1 cent above the previous record, as of 4.48 am EDT (0848 GMT) and later climbed to $124.75.

New York's main oil futures contract, light sweet crude for June delivery, spiked to a historic 124.73 dollars per barrel at 0600 GMT in European deals. But it eased later to 124.24 dollars, a rise of 55 cents from
the closing price in New York on Thursday.

Meanwhile an OPEC source said that the organisation may consult on whether it needs to boost oil output before a scheduled meeting in September should crude oil prices keep rising.

'If the price keeps going up, OPEC may consult on an increase in production before it meets in September,' the source said.

'In my view, any increase would have to be more than 500,000 barrels per day to have an impact on the price.'-Reuters