Oil past $127

SINGAPORE - Oil extended its rally on Tuesday past $127 a barrel, driven by renewed fears of supply disruption and OPEC's reluctance to raise output at its next meeting in September.

US light crude contract for June delivery rose 35 cents to $127.40 a barrel by 0155 GMT, having settled up 76 cents in New York. Prices were within sight of the intraday record of $127.82 hit on Friday.

"The market is focusing on the supply side again. The supply side risks are driving prices higher," said Gerard Burg of National Australia Bank in Melbourne.

Supply fears resulted from a global diesel boom led by China, the Middle East, South Africa and South America for diesel-fired power generators.

China, the world's second-biggest energy user, released a total of 8,312 tons of refined fuel from its little-known strategic reserves to help relief efforts in quake-hit Sichuan and Gansu provinces.

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