Oil price tips over $70 a barrel

Oil prices hit more than $71 in intra-day trading in London

Oil prices tipped beyond $70 a barrel in London, fuelling fears over supply. The prices were reacting to earlier US data showing disappointing inventories.

Brent crude rose $1.02 higher to $70.96 after breaching $71 a barrel. New York sweet crude was $1.39 up at $67.65.

US petrol figures showed petrol stocks were unusually low, as the US driving season starts and demand peaks.

Concern over the impact of Middle East tension on oil supplies was also a factor pushing up prices.

'Fundamentals'

A dispute between the West and Iran over its uranium enrichment project remains a source of worry. The United Nations again tried to urge Iran to cease its nuclear enrichment programme on Thursday.

Also, the move by Palestinian Authority President Mahmoud Abbas to dismiss the Hamas-led coalition government and issue a state of emergency on the same day raised concerns over instability in the region.

And a drop in output at US refineries raised concerns that old refineries would not be able to meet demand exactly at the time when consumers were using more petrol over the summer holiday period.

Separately, the oil producer's group, Opec, maintained its forecast for global oil consumption for the year.

"Market fundamentals do not indicate that additional supply is necessary at this time," said Opec in its monthly report.

The group expects a 1.5% increase in world oil demand to 85.6 million barrels per day in 2007.

Thursday's climb came a day after data from the US department of energy showed that US petrol stocks were flat in the week ending 8 June - well off the average typical of this time of year.

"The market was expecting a very bearish report from the department of energy which did not materialise," Michael Davies, an analyst with Sucden said on Thursday in London.