Oil rose to a record high above $118 on Tuesday, boosted by a jump in oil demand last month from China, the world's second biggest energy consumer, and worries about supply from key producers Russia and Nigeria.

US light crude for May delivery was up 25 cents at $117.73 a barrel by 1108GMT, easing from an all-time peak of $118.05 hit earlier in the day.

London Brent crude was up 40 cents at $114.83 a barrel, after rising to a record peak of $115.03. Oil has hit a string of record highs this month, driven by booming demand from emerging markets such as China that has coincided with long-term supply constraints.

A weak US dollar has also played a part in boosting the price of dollar-denominated commodities like oil and also attracted speculative inflows from hedge funds.

'Every time the market does make new highs, it suggests that the upward trend is still intact and that provides a catalyst for the funds to keep buying it,' said Tony Machacek of Bache Commodities Limited.

China's oil demand leapt 8 per cent in March from a year ago, the fastest rate in 19 months as refiners boosted imports ahead of the Olympics.

But the high cost of producing more oil plus political constraints on new supplies mean the market looks set to struggle to keep pace with growing emerging market demand.

'The news that Russia, the largest non-Opec producer, will produce less this year than the year before and Nigeria's output may be set to fall because of lack of investment makes people realise high prices are justified,' said Bob Greer, executive vice president at commodity fund manager Pimco.

'The 5 year forward contract has gone above $100,' he said, referring to a surge in long-dated oil prices. From 2010 to 2016, for example, oil prices currently range from around $106 to nearly $108 a barrel.

The long-term drivers for investment in the oil market include tight spare capacity, slow output growth from non-Opec producers and robust demand from emerging economies.-Reuters