Oil steadied near $126 a barrel today, having hit a new record of nearly $127 the previous session, after a reassurance from Iran that it had no plans to cut exports.
A top Iranian official said today Tehran is continuing sell oil to international customers as usual and has no plans to cut exports to world markets.
US light crude for June delivery was 11 cents higher at $125.91 a barrel by 10.14pm. It has hit a string of record highs over the past week and reached a peak of $126.98 a barrel yesterday.
London Brent crude was down 49 cents at $123.61 a barrel.
The market's surge yesterday came after Iranian President Mahmoud Ahmadinejad said a proposal for OPEC's second biggest producer to cut crude output was under review.
But a comment on Wednesday from the National Iranian Oil Company soothed the volatile market.
"There is no plan to cut exports and we keep our promises (to clients) ... and we export as usual," said Hojjatollah Ghanimifard, executive director of international affairs at NIOC.
Concern in the oil market that Tehran's dispute with the West over its nuclear programme may lead to a disruption in its crude exports have helped drive oil to record highs.
The market awaited weekly fuel inventory data from the United States, due at 1430 GMT, forecast to show an 800,000 barrel rise in distillate stocks and a 1.8 million barrel increase in crude inventories, their fourth increase in a row.
The view that supplies of distillates such as heating oil and diesel fuel are tightening helped drive US heating oil futures to a record of $3.6989 a gallon yesterday, which boosted the entire oil complex.