CORRECTED - UPDATE 4-Oil sets yet more highs despite US inventory rise

(Corrects gasoline figure in paragraph 4)

By Ikuko Kao

LONDON, May 7 (Reuters) - Oil set yet more record highs on
Wednesday even after a large increase in U.S. crude inventories
as concerns over global supplies continued to linger.

U.S. crude CLc1 struck $122.81 a barrel, setting new peaks
for three consecutive days and was trading 15 cents higher at
$121.99 by 1545 GMT. London Brent crude LCOc1 set a record
high of $121.47.

U.S. crude had fallen more than $1 in an initial response to
figures from the U.S. Energy Information Administration (EIA)
showing crude oil inventories rose 5.7 million barrels last week
while analysts had forecast an increase of 1.6 million barrels.

Gasoline rose 800,000 barrels, compared with forecasts for a
fall of 100,000 barrels.

Distillate inventories, including heating fuel and diesel,
dropped by 100,000 barrels to 105.7 million barrels, against
analysts' expectation of an 800,000 barrel increase. [EIA/S]

The distillate inventories remain below year earlier levels
in the United States and Europe.

"Traders were trying to comb the EIA data for any bullish
feature and they found it in distillates," Jim Ritterbusch,
president of Ritterbusch & Associates, said.

London's ICE gas oil futures LCOc1 led the oil complex
higher, rising 0.81 percent, while New York RBOB gasoline RBc1
fell 0.47 percent.

The advance in crude oil prices to fresh highs came after
the head of the state run company of OPEC member Libya said oil
prices would rise further.

"I think it will go higher," Shokri Ghanem, head of Libya's
National Oil Corporation, told Reuters in a telephone interview.
"It is the same old story -- speculation and geopolitics."

Traders remained concerned about supply disruptions in
Nigeria, despite the end last week of a strike which halted
Exxon Mobil (XOM.N) output in the West African country.

"We all share the concerns over supply issues as Nigerian
production improves, but is way off normal capacity and of
course Iran's nuclear debate has resurfaced and will not go
away," MF Global Energy said in a research note.

Concerns over supplies from the world's No. 4 oil producer
resurfaced when Tehran said earlier this week it would refuse
nuclear inspections.
(Additional reporting by James Topham in Tokyo and Gene Ramos
in New York; editing by James Jukwey)