Oil prices rise despite improved refining picture

NEW YORK (AFP) - World oil prices rose yesterday, one day after New York crude prices hit a record high 78.77 dollars per barrel on news of sliding American crude reserves, despite improvement in US refinery output.

New York's main futures contract, light sweet crude for delivery in September, closed up 33 cents at 76.86 dollars per barrel.

The contract had soared to 78.77 dollars in Wednesday trading after the US Department of Energy (DoE) reported that US crude stockpiles sank 6.5 million barrels in the week ended July 27.

That was almost six times more than market forecasts predicting a fall of 1.13 million barrels, and sparked concern over tight global energy supplies, traders said.

In London, the price of Brent North Sea crude for September delivery settled up 41 cents at 75.76 dollars per barrel.

The DoE had also revealed Wednesday that US refinery utilization rates rose to 93.6 percent in the week to July 27 -- their highest level in 11 months.

Some analysts said the increase in refinery rates had been initially overlooked by speculators, who focused on the larger-than-expected drop in oil stocks.

However, they soon switched focus to the rise in refining rates that resulted in an increase in both US gasoline (petrol) and distillates stockpiles.

Prices remained underpinned by low US crude stocks, geopolitical tensions, risks to supply from the North Atlantic hurricane season and OPEC's seeming reluctance to increase output, analysts said.

"Increasing (US) crude oil demand and decreasing imports outstripped the market consensus," Societe Generale analysts said of the DoE report.

Higher prices this week have also sparked fresh calls from the International Energy Agency for oil producers' group OPEC to increase its production.

OPEC members, who supply about 40 percent of the world's crude, insist that recent gains in prices are not due to tight supply.

The Organization of the Petroleum Exporting Countries has resisted previous IEA calls to pump more crude to keep oil prices down. The next OPEC meeting is scheduled on September 11 in Vienna.

This week's all-time high in New York topped the previous record of 78.40 dollars set on July 13, 2006 amid violence between Israel and Lebanon.