Oil prices soared toward US$71 a barrel today on concerns over low fuel production from hobbling US oil refineries and a flare up of violence in the Middle East.
London Brent crude, currently seen as the best indicator of the global market, climbed US$1.02 to US$70.96 a barrel,adding to Wednesday's gain of US$1.15. US crude rose US$1.39 to US$67.65 a barrel, the highest settlement since September 2006.
A report from the US government on Wednesday showed petrol stockpiles failed to build as expected due in part to a slide in refinery activity and lower import levels.
"The petroleum markets are still on the upswing, building on the Wednesday rally sparked by the bullish DOE report," said Tim Evans, analyst at Citigroup Futures Research.
US petrol supplies are running about 6 per cent below a year ago following a prolonged stretch of refinery outages since winter, according to the report from the Energy Information Administration.
Heating oil stockpiles also have been falling, with supplies running about 35 per cent below a year ago -- triggering an off-season rally in US heating oil futures to their highest level since September 2006.
Adding support to oil prices, Hamas fighters on Thursday bombarded a major security compound belonging to the rival Fatah group in Gaza City as the Islamist movement appeared to tighten its grip on the territory in fierce factional fighting.
The violence added to an already edgy market over supply disruptions in Nigeria and worries over Iran's atomic programme.
European powers on Wednesday warned Tehran that it faced a possible third round of broader sanctions for expanding uranium enrichment and curbing UN inspectors' access.
Separately, Iranian President Mahmoud Ahmadinejad reiterated his defiance to the threat of further action, saying Iran "does not give the slightest value to your resolution."
In its monthly report on Thursday, Opec said crude oil supply was sufficient for now, though the producer group stands ready to raise supply if needed to meet growing world demand.
