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Last Updated: Wednesday, 19 April 2006, 21:09 GMT 22:09 UK
US jitters fuel fresh oil highs
Oil traders on Nymex exchange
Oil prices have now passed peaks hit in 2005 during Hurricane Katrina
Oil prices again reached record highs - surging above $72 a barrel - after official figures revealed a drop in US gasoline supplies.

US light crude jumped to $72.40, before settling at $72.17 on the New York Mercantile Exchange.

London traded Brent crude settled at $73.73 - up $1.22 - after earlier hitting a record $74.

Fears over US stocks added to pressure on prices, recently fuelled by US-Iran tensions and Nigerian supply concerns.

Global demand for oil remains intense, particularly in the run-up to the US summer holiday season, while available supplies remain tight.

US jitters

Wednesday's brief surge in prices was triggered by news that US gasoline (petrol) stockpiles had experienced a bigger than expected fall last week.

It's like the Cuban Missile Crisis, we are just waiting for someone to blink
Michael Coleman, Aisling Analytics

The US Department of Energy revealed stocks had fallen by 5.4 million barrels last week, twice as much as analysts had forecast.

However, the department also revealed that average daily gasoline demand had been rising by 0.9% since the start of the year, compared with an increase of 1.4% during the same period in 2005.

That news, combined with figures showing that crude oil inventories were 7% higher than at the same time last year, soon calmed initial jitters about US fuel supplies.

Prices have risen 16% in the past month as Iran's nuclear row has worsened and Nigerian supplies have been disrupted.

Iran issue

Analysts said that prices would continue to head upwards as long as Iran's dispute with the international community over its nuclear intentions remained unresolved.

"The market has had a decent run-up in the past few sessions so we may see a bit of consolidation, but I don't expect it to be a sustained dip in prices," Commonwealth Bank of Australia Analyst Tobin Gorey said.

"The worries of Iran won't go away anytime soon, and in that sort of environment very few people are willing to be short on oil."

On Tuesday, the US failed to win international support from the UN Security Council for targeted sanctions against the country, such as freezing assets and curbing the visas of Iranian officials.

US threat

President Bush also refused to rule out the use of force to prevent Iran developing nuclear weapons, declaring that all options were "on the table".

"It's like the Cuban Missile Crisis," said Michael Coleman, managing director of Singapore-based hedge fund Aisling Analytics.

"We are just waiting for someone to blink."

Militia violence in Nigeria, which has led to the suspension of 25% of its output, has also forced prices upwards in recent weeks.

Over the past month, prices have gained more than $10, or 16%.

Countries in the Opec oil producers' cartel have admitted there is little they can do to quell the rise in prices.

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