Oil edged lower after hitting a record high near $124 yesterday, as the dollar?s rise to a two-month high against the euro countered bullish news of falling US diesel stockpiles.

US crude for June fell 27 cents to $123.26 a barrel by 0747 GMT, off a record of $123.93 reached earlier. London Brent crude shed 20 cents to $122.12 a barrel.

Data on the day before from the US Energy Information Administration (EIA) showed a decline last week in distillate inventories ? which include diesel and heating oil ? that brought stockpiles in the world?s biggest energy consumer nearly 13 % below a year ago.

Tight power supplies in China, South Africa, Chile, Argentina and parts of the Middle East have set off a worldwide boom in demand for diesel for use in electric generators, adding to robust demand for use in Europe?s passenger vehicle fleet. But the impact of the drop was cushioned by larger-than-expected increases in stocks of both crude oil and gasoline.