US oil prices held just below $40 today ahead of weekly US government data expected to show a fresh increase in fuel stockpiles.
US light crude gained 10 cents to $39.54 a barrel, within $3 of 21-year highs hit last month. London Brent crude was up 13 cents at $36.82 a barrel.
Crude stocks in the US have grown steadily in recent months, but strong demand has prevented equivalent gains in refined product stocks, helping to underpin oil's price strength.
Crude prices have stayed close to $40 in recent months on worries of disruptions to oil flows in Iraq, Nigeria and Russia, where the biggest producers, YUKOS, faces possible bankruptcy.
Strong global oil demand has left little room to cope with supply hitches.
Only Saudi Arabia, the world's biggest exporter, has any significant spare production capacity with the other OPEC producers pumping flat out and Iraq's output recovering from war damage.
Industry sources in Iraq said the country's oil exports would remain limited to southern terminals as sabotage and infrastructure defects prevent a reopening of a northern pipeline to Turkey.
Iraq exports about 1.8 million bpd from southern oil terminals at Basra and Khor al-Amaya and officials recently said they hoped to resume overseas sales of about 350,000 bpd from Turkey's Mediterranean port, Ceyhan.
Before the US-led invasion last year, Iraq exported 800,000 bpd through Ceyhan.
Fears over gasoline supplies to meet peak summer demand have prompted US and European refiners to crank up production of the auto fuel at the expense of heating oil, triggering an almost 15 per cent rise in gas oil futures prices in London since end-June.