Funds were keen to shift their money into the oil market after seeing U.S. crude rise about 13 percent since the start of the month, analysts say.
U.S. crude for June delivery rose $1.37 to $125.06 by 1025 GMT, after earlier hitting a record high of $125.12 a barrel.
London Brent crude rose $1.36 to $124.20 per barrel.
"Funds are pouring into the crude market as prices have been performing extremely well," said Tatsuo Kageyama, analyst at Kanetsu Asset Management in Tokyo.
"Lingering geopolitical fears and high heating oil prices are helping the market, but the speed of the rise is too fast."
Gains in U.S. crude picked up momentum after distillate stocks in the United States, including heating oil, fell.
The U.S. Energy Information Administration (EIA) said on Wednesday domestic distillate stocks, which include heating oil and diesel, fell 100,000 barrels last week, to 105.7 million barrels, against forecasts for an 800,000-barrel rise.
Gas oil futures, the benchmark for European heating oil and diesel contract, surged to a new record high amid worries about tight global diesel supplies.
The rally in gas oil has outstripped Brent and its premium over Brent is at a record high.
"I'm not particularly surprised by the speed of the rise in crude. There are many market bulls hoping for prices to rise heading into the summer," said Tetsu Emori, fund manager at Astmax Co Ltd in Tokyo.
This is despite the recent recovery in the U.S. dollar, which has had an inverse relationship with oil prices.
Spotlight on OPEC
Oil's relentless rise has once again turned the spotlight on Organization of the Petroleum Exporting Countries (OPEC), which has for months resisted calls to pump more oil to tame prices.
On Friday, an OPEC source said the exporters' group may consult on whether it needs to boost 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. In my view, any increase would have to be more than 500,000 barrels per day to have an impact on the price," the source told Reuters.
OPEC's Secretary-general Abdullah al-Badri said on Thursday world oil markets have enough supply now, but OPEC was willing to pump more if needed to keep pace with demand.
OPEC exports, excluding from Angola and Ecuador, will rise by 220,000 barrels per day (bpd) in the four weeks to May 24 on Asian demand and a recovery in Nigerian supplies after a strike that crippled output, said British consultancy Oil Movements.
Traders will be watching the release later on Friday of U.S. international trade data for March (1230 GMT) and the Economic Cycle Research Institute weekly index at (1430 GMT) for potential price guidance.
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