Oil approached $66 a barrel last night after fears of potential supply disruptions in the Middle East drove prices higher late last week.
US crude was up 10 cents at $65.45 having jumped more than $2 a barrel on Friday. London Brent crude was up 28 cents to $64.64.
Global production and refining constraints combined with political tensions in oil-producing countries have kept US oil at an average $53.79 this year versus an average $41.47 in 2004. The rally has yet to slow economic growth dramatically.
"Unless one or more of the factors underpinning oil prices eases, we can expect oil to trade above $50 again in 2006," said the Centre for Global Energy Studies in its monthly report.
A series of production outages - and the threat of more to come - has overshadowed relatively comfortable crude stock levels in the US, the world's biggest consumer.
Dealers were relieved to see Iraq's south oil exports of some 1.5 million barrels per day restart on Monday after being stopped for more than 10 hours by a power cut.
Vulnerability in the oil supply chain is leading analysts to speak again of a "fear factor" inflating prices.
"Behind this is a realization that it would only require one severe supply disruption (e.g. from Iraq, Iran, Venezuela,Nigeria) to wipe out the crude stock cushion," said a Standard Bank report.
"And less unusual events (such as a severe US Gulf hurricane season or a cold winter) still have potential to tighten the market, highlighting dangers from one of the bigger risks." - (Reuters)
