Oil price up on US supply slump

Oil prices are rising ahead of next week's Opec meeting

Oil prices rose above $77 a barrel on Thursday as official data showed that US reserves of crude and petrol had fallen more heavily than expected.

Dwindling hopes of a rise in output from next week's meeting of producers cartel Opec, also pushed up prices.

October light sweet crude rose 57 cents to $76.30 a barrel having climbed above $77 earlier. Meanwhile Brent crude surged 43 cents to $74.77.

The rise is a move towards the record high of $78.77, seen on 1 August.

Gains were pared by data showing higher utilisation of US refineries.

'Tight market'

US Energy Information Administration figures showed that American crude reserves had slumped by 3.9 million barrels in the week to 31 August. Analysts had expected a drop of about 2.2 million barrels.

Meanwhile petrol inventories fell by 1.5 million barrels.

The new head of the International Energy Agency (IEA) said the high oil prices were sending a message to Opec about the tightness of the market.

Nobuo Tanaka took over as head of the Paris-based agency at the start of the month.

"The price level is a signal. The market is still very tight, but our concern is what will happen in the future," he said.

He added that it was too early to judge what the effect of the turmoil in financial markets would be on demand for oil.

"We will have some kind of assessment by the end of the year."