Oil prices cool off after sharp run-ups last week

SINGAPORE (AFP) - Oil prices paused for a breather in Asian trade Monday after surging to levels not seen in a year on strong demand and geopolitical concerns, dealers said.

Supply concerns were also a factor behind the price surge seen last week, they said.

In the past month, crude prices have climbed about five dollars in New York and seven dollars in London.

At 10:30 am (0230 GMT), New York's main contract, light sweet crude for September delivery was 34 cents lower at 75.45 US dollars a barrel from 75.79 dollars in late US trades Friday.

Brent North Sea crude for September delivery was 40 cents lower at 77.24 dollars but was still within striking distance of its record high of 78.64 dollars struck on August 7, 2006.

"Even with oil prices at this level, demand for oil continues to increase and that's the key," said Phil Flynn, an analyst at Alaron Trading.

The International Energy Agency, which defends consumer countries' interests, predicts that global demand, which had slowed in the high-ticket year of 2006, would continue to rebound this year and the next, despite elevated prices, while surplus production capacities would dwindle.

US gasoline (petrol) demand has also remained strong despite higher prices, causing worries among traders over whether the country's refineries can keep up with with the market.

Data from the US Department of Energy (DoE) showed motor fuel consumption hit 9.71 million barrels per day, the second-highest level to date.

Gasoline inventories fell by 2.3 million barrels in the week ended July 13, to 203.3 million barrels, leaving them 4.5 percent below their year-earlier levels, the DoE said last week. Analysts had pencilled in a rise of 700,000 barrels.

The surprise drop in US gasoline stocks helped drive prices higher, as did further signs that demand for crude would continue to climb.