New York crude hits 12-month high above 78 dollars

LONDON (AFP) - The price of crude oil surged in New York yesterday to the highest level in more than a year, supported by market expectations that US energy stockpiles have fallen further, dealers said.

New York's main futures contract, light sweet crude for delivery in September, touched 78.24 dollars -- which was last seen July 13, 2006, the same day that it hit a record high of 78.40 dollars.

The US contract later stood at 78.20 dollars, up 1.37 dollars from Monday's close.

In London yesterday, the price of Brent North Sea crude for September delivery added 1.11 dollars to 76.84 dollars per barrel.

Traders are on tenterhooks ahead of Wednesday's crucial inventories report from the US Department of Energy, which is widely expected to flag another decline in American crude reserves.

That could push the New York crude price beyond its all-time high. London Brent meanwhile remains two dollars beneath its August 2006 record high of 78.64 dollars.

"If we see another draw in crude stocks as expected, and especially if there is a drop in stocks at (key US storage terminal) Cushing, it will push New York crude higher," said Sucden analyst Michael Davies.

Last week, prices rallied after the US government revealed that crude inventories had fallen by 1.1 million barrels, prompting renewed concern about supplies.

Crude futures had dipped on Monday as traders cashed in profits after New York crude surged close to a record close last Friday, traders said.

But prices were underpinned Tuesday by suggestions that OPEC will not increase production of crude oil at its meeting next month, they added.

The oil producers' grouping had indicated last week that it might increase output in the fourth quarter.

However, Iranian media reported that Oil Minister Kazem Vaziri-Hamaneh said Monday the Islamic Republic did not support higher oil production among OPEC member states.

Iran is the second-largest producer in the Organization of the Petroleum Exporting Countries after Saudi Arabia.

"Comments from Iran that the next OPEC meeting agenda will not include changes in output serve to lend a bullish tone to the market, and the expectations of a further attempt on the record levels remain high," said Bank of Ireland analyst Paul Harris.

Organisations such as the International Energy Agency have repeatedly called on OPEC to boost production of crude oil to meet voracious demand.

But the cartel has refused to do so, saying any shortage of gasoline and other refined products is due to a lack of refining capacity, not of crude.