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Last Updated: Monday, 14 May 2007, 20:52 GMT 21:52 UK
Oil up as US petrol prices surge
Oil refinery in Texas
Refineries along the Gulf Coast were devastated by Hurricane Katrina
Oil prices rose slightly, cutting earlier gains, as US fuel surged to a record high at $3.073 a gallon.

With the price of petrol crashing through levels set after Hurricane Katrina hit in 2005, Brent crude was up 4 cents at $66.87 in London.

Meanwhile, US light crude added nine cents at $62.46 a barrel.

The American Automobile Association (AAA) blamed tight gas reserves for the sharp rise in petrol at the pump ahead of the summer driving season.

Worst possible news

A series of glitches and partial shutdowns at refineries across the US and overseas has led to a build up in crude oil stocks and low gas inventories.

Some of these refineries are now coming back on stream, but analysts are concerned that production will still not be able to satisfy demand as summer holidays begin, which is the peak driving season in the US.

"This is the worst possible news at the worst possible time," said AAA spokesman John Townsend.

"There's not a lot of time for refineries to catch up with demand," said Victor Shum, an energy analyst at Purvin & Getz in Singapore, who said low gas reserves would continue to drive oil prices.

Supply concerns in Nigeria, the world's eighth-largest oil exporter, would also continue to sustain the market, according to analysts.

Militant attacks have shut down almost a third of the country's oil production.

The International Energy Agency has warned the Organisation of Petroleum Exporting Countries (OPEC) needs to increase output soon to meet an expected increase of oil product demand of 1.6 million barrels a day in June.

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