Oil prices at 11-month highs
Posted: 11 July 2007 0422 hrs

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NEW YORK : World oil prices climbed to new 11-month peaks on Tuesday as traders fretted or global supply a day before a crucial US report and unrest continued in Nigeria, Africa's biggest producer.

New York's main oil futures contract, light sweet crude for delivery in August, gained 62 cents to close at 72.81 per barrel.

In London, Brent North Sea crude for August delivery also gained 62 cents to settle at 76.40 per barrel.

Oil prices pushed toward their record highs reached last summer: 78.64 dollars per barrel in London and 78.40 dollars in New York.

Global Insight analyst Simon Wardell said supply concerns were dominating the market.

"With a very tight market, if the stocks don't build, we could see prices rise further," Wardell said.

Traders were focused on Wednesday's weekly update on US energy stockpiles by the Department of Energy. Drawing close attention were gasoline reserves, which are facing peak demand during the US summer vacation driving season.

Last week, the DoE said gasoline inventories were about 4.2 percent below their level from a year ago.

The market was still digesting an International Energy Agency (IEA) report published on Monday that warned OPEC spare production capacity would shrink to bare-bones levels by 2012 amid robust economic growth, particularly in Asia and the Middle East.

"The IEA projects oil demand to raise to 95.8 million barrels of oil a day by 2012 which is an astonishing level that will give nightmares to every peak theory oil enthusiast," said Phil Flynn of Alaron Trading.

Flynn said the IEA is worrying about falling production in oil fields in Mexico and the North Sea, as well as the growing nationalisation of world oil supply.

"The IEA is telling us that worldwide oil supplies are falling faster than expected and could create what the IEA calls a world oil supply crunch in the next five years," he said.

Maintenance at North Sea energy facilities scheduled next month also was fuelling buying, analysts said.

Meanwhile, traders monitored further unrest in Nigeria, the world's eighth-biggest crude oil exporter and the largest producer on the African continent.

Nigerian troops on Tuesday foiled an attempt by militants to kidnap workers at a South Korean firm in southern Rivers state, killing one insurgent and injuring several others, police and locals said.

The Joint Task Force, charged with protecting oil firms and personnel in the crude-rich Niger delta, prevented the militants from attacking the Daewoo yard at Mbiama, they said.

The incident came a day after two foreigners - a Briton and a Bulgarian - were kidnapped in the region. Two Nigerian engineers working for Anglo-Dutch Shell were also abducted at Buguma. - AFP/de