UPDATE 7-Oil sets new record near $120

                                
 (Adds more detail on Nigeria/Exxon, updates prices)
                                
 By Jane Merriman
                                
 LONDON, April 28 (Reuters) - Oil hit a new record near $120
a barrel on Monday, boosted by a string of bullish factors that
include big disruptions to Nigeria's output and a UK refinery
strike, highlighting anxieties over threats to supply.
                                
 Prices retreated from early peaks as the dollar rallied
versus the euro and yen, reflecting some expectations that the
U.S. Federal Reserve may not cut interest rates this week.
                                
 U.S. light crude for June delivery <CLc1> was up 30 cents at
$118.82 a barrel by 1321 GMT, after a record high of $119.93.
Prices are up almost 25 percent since the start of the year.
                                
 London Brent crude <LCOc1> was up 35 cents at $116.69.
                                
 "The Federal Reserve will have a chance to bolster the
dollar if it decides to hold the line on further rate
increases," Edward Meir, analyst with broker MF Global, said in
a research note. "Both these developments could possibly induce
a correction in energy prices later in the week."
                                
 Crude prices have surged more than fivefold since 2002 as
global supplies struggle to keep pace with rising demand in
emerging economies, such as China.
                                
 Years of underinvestment in new oil production means the
market could struggle to keep pace with demand from China. The
finely-balanced supply-demand outlook has made prices sensitive
to any supply disruptions.
                                
 Exxon Mobil <XOM.N>, for example, has had to shut nearly all
of its Nigerian oil production, totalling around 770,000 barrel
per day, due to a strike. [nL28161600]
                                
 On Sunday, unidentified gunmen killed five policemen and
seized several weapons in a raid on a police station in the
oil-rich southern Nigerian state of Rivers. [nL27385908]
                                
 Royal Dutch Shell <RDSa.L> has had to shut around 169,000
barrels per day of Nigerian output due to pipeline attacks by
rebels.
                                
 The 700,000-barrel-per-day (bpd) Forties North Sea crude oil
pipeline remained closed on Monday due to a strike at the
210,000 bpd Grangemouth refinery over pensions [nL2653513]
                                
 Ineos, the owner of the Grangemouth refinery, expects
striking employees to return to work on Tuesday. BP has said the
Forties pipeline could then be back in operation within 24 hours
but might take a few more days to get back to full flow.
                                
 The Organization of the Petroleum Exporting Countries
(OPEC), that produces more than a third of the world's oil, has
refused to pump more, saying the market is adequately supplied.
                                
 OPEC President Chakib Khelil blamed the fall in the dollar
for high prices and did not rule out prices rising to $200 a
barrel.
                                
 "Without geopolitical problems and the fall in the dollar,
the prices of oil would not be at this level," he was quoted
saying in Algerian government newspaper El Moudhajid.
[nL28112626]
                                
   (Additional reporting by Fayen Wong in Perth; editing by
William Hardy)