LONDON (AFP) - The price of crude oil struck a record high 126.98 dollars a barrel on Tuesday despite expectations of slower demand growth for crude, traders said. New York crude beat its all-time peak of 126.40 dollars, which was reached on Monday. The price of oil had fallen earlier Tuesday on profit-taking as the International Energy Agency (IEA) cut its forecast for growth in global demand. After reaching new heights Tuesday, New York's main oil futures contract, light sweet crude for June delivery, stood at 125.94 dollars, up 1.71 dollars from Monday's close. London's Brent crude contract for June jumped 1.09 dollars to 124 dollars. "What we've seen in this market since August is that any dip is eventually met by a short-covering rally that pushes prices to new highs," said AG Edwards analyst Eric Wittenauer. "It is not a surprise to see prices struggle to show any kind of downward trend," he added. The Paris-based IEA forecast in a monthly report Tuesday that crude oil demand in 2008 would stand at 86.8 million barrels per day (bpd) some 390,000 bpd less than previous estimate given in April. The international agency also said it now estimated world oil demand in 2007 at 85.8 million bpd. "The IEA has revised its demand forecast further to a growth of only one million bpd for 2008 and warned that further downward revisions could be on the way," said Petromatrix analyst Olivier Jakob. "At the start of the year, the IEA was forecasting demand growth of 2.1 million bpd which makes for global demand projections cut in half since the year started." Yet prices continued to surge on Tuesday. Along with an inflow of investor funds, analysts have cited a variety of factors for this year's price spikes, including rising energy demand from Asian powerhouse economies China and India, and OPEC's refusal to pump more crude. "Oil prices have simply risen too far and too fast over a short period of time with really no reasons driving the rally other than investor and technical interest," said Victor Shum, an analyst at Purvin and Gertz energy consultancy in Singapore. Prices were also moving in line with changes in the dollar but traders said that connection has weakened in recent weeks. The US currency fell to a record low against the euro in April but has regained ground since then. A weaker US currency makes dollar-priced crude more affordable for holders of stronger currencies. Analysts said the market was also looking overbought as threatened disruptions to Middle East supply have failed to materialise and as violent threats to output in Nigeria are increasingly priced in. "There is still scope for a correction in oil pricing," Shum said. "The support level is 120 (dollars) at this point."