Oil prices rose this morning to stand above 134 dollars a barrel as traders digested a warning from the International Energy Agency that soaring crude costs would dampen oil demand growth in 2008.
New York's main oil futures contract, light sweet crude for July delivery, won 30 cents to 134.65 dollars per barrel.
The contract had surged to a lifetime high of 139.12 dollars last Friday, when it won a record-busting 10.75 dollars in just one day's trade.
Elsewhere today, Brent North Sea crude for July delivery added 30 cents to reach 134.21 dollars, after hitting an historic peak of 138.12 last Friday.
"Oil prices were fairly flat (on Tuesday) ... after the IEA cut their demand growth forecast for the fifth consecutive month," said analyst Nimit Khamar at the Sucden brokerage in London.
"However the impact of the reduction was offset by their expectations for slower supply growth."
The Paris-based IEA said it now expected global oil demand to average 86.8 million barrels per day this year, or 80,000 barrels per day below its estimate last month.
"The IEA cut demand growth by 80,000 barrels a day from last month's forecast, to its lowest growth level since 2002 amid the slowdown in the US economy and as a result of reduced fuel subsidies in some Asian economies," added Khamar.
"However, this reduction in oil demand was overshadowed by IEA's reduced forecasts for non-OPEC growth to 455,000 barrels per day, down from their previous forecast of 680,000 barrels a day."
The IEA, the oil market watchdog for industrialised countries, also sent a strong message to reassure markets that it would release strategic oil stocks if supplies were disrupted by tension, or an eventual attack, over Iran's nuclear programme.
However, the price surge last week to almost 140 dollars per barrel "is not just about geopolitical risks -- the supply situation remains tight," the IEA said, signalling it was uncertain about how supply and demand will play out in the next six months.