Oil surged to 11-month highs above $75 a barrel on Friday, putting the market within reach of the all-time record of $78.65 set in August 2006.
Abductions in Nigeria's oil producing Niger Delta and increased demand from refiners in top consumer the United States helped drive the price uptrend.
London Brent crude, now seen as a better indicator of the global market, rose 25 cents to $75.00 a barrel by 0952 GMT, after touching a session high of $75.10, its highest since August 14, 2006.U.S. crude rose 12 cents to $71.93.
"It's a combination of Nigeria and concerns about stocks in the U.S. The Nigerian factor triggered prices in the midst of the summer driving season," said Gerard Rigby from Fuel First Consulting in Sydney.
The end of a one-month truce by the rebel group responsible for much of the violence directed at the Nigerian oil industry, an attack on an oil rig and the kidnapping of a 3-year-old British girl in Port Harcourt reminded investors of the continued risk to supplies from the world's eighth-largest oil exporter.
Some 700,000 barrels per day (bpd) of Nigerian production is shut in after a year and a half of attacks on its oil industry.
Concerns over whether U.S. gasoline inventories could keep pace with robust demand lingered despite a higher-than-expected weekly stock rise of 1.8 million barrels reported by the U.S. Energy Information Administration.
Stocks are below normal levels for this time of the year while gasoline demand is up 1.2 percent from last year.
This year's lengthy string of refinery upsets persisted as well, with BP Plc. shutting a hydrocracking unit at its 260,000 bpd Los Angeles-area refinery for unplanned repairs that might last up to 10 day, sources familiar with operations said.
Gasoline supplies worldwide are also tightening.
Northwest European stock levels have fallen to a two-month low, exports from key Asian exporter China in July will drop to their lowest in 10 months and Japanese stocks this week dipped below year-ago levels for the first time this year.
With the focus on the risk to future supplies and expectations that rising refinery runs will draw down crude stocks, traders looked beyond the bigger-than-expected 3.1 million barrels build in U.S. crude stocks last week.
"Robust crude stock levels belie expected Q3 tightness in crude markets as refineries are still returning from maintenance, in our view. Worse, we think inventories continue to send a false signal to OPEC to keep oil off the market," Lehman Brothers said in a research note.
(Reuters, 06/07/2007)