FACTBOX: Why oil prices are at a record high

(Reuters) - U.S. crude oil hit a record high of $81.24 a barrel on Tuesday, the fifth consecutive trading session that prices have reached an all-time peak.

Real and threatened disruptions to crude oil supplies, constraints at refineries in consuming countries, resilient demand and a flow of investor money into oil have fuelled the rally from a dip below $50 at the start of the year.

FUNDS

Investment flows from pension and hedge funds into commodities including oil have resumed in recent months after a hiatus earlier in the year due to concerns about how the global economy was moving.

Speculative trading in energy markets has boomed in recent years as investors sought to beat returns in other markets such as equities and bonds.

OPEC SUPPLY RESTRAINT

The Organization of the Petroleum Exporting Countries, source of more than a third of the world's oil, started to reduce oil output in late 2006 to stem a fall in prices.

Fewer OPEC barrels entering the market helped propel this year's rally and consumer nations led by the International Energy Agency for months urged OPEC to pump more oil. OPEC countered that supplies were adequate.

But at a meeting last week, OPEC decided to increase oil output by 500,000 barrels per day, equal to about 1.6 percent of production by the 12-member group in August, from November 1.

The group's Secretary General, Abudullah al-Badri, said on Friday OPEC viewed oil's surge over $80 as temporary and unsupported by fundamentals such as supply and demand. OPEC officials are worried the rising price could limit demand in the long term.

An OPEC source said on Tuesday the group would probably hold consultations about a further output increase if the price of oil were to stay above $80 a barrel for more than 15-20 days.

DOLLAR WEAKNESS

The fall in the value of the U.S. dollar against other major currencies has reduced the purchasing power of OPEC's revenues and increased the purchasing power of some non-dollar consumers.

It has also helped to drive buying across commodities as investors have viewed dollar assets as relatively cheap.

OPEC oil ministers have noted that even though oil prices are rising to record nominal levels, inflation and the dollar have softened the impact.

Mohammed al-Hamli, the OPEC president, said in July that in real terms, adjusted for inflation and the weak dollar, the cost of a barrel is no higher than it was three decades ago.