Oil prices surged to a new high above $47 a barrel Wednesday on evidence from major economies that energy costs are not substantially slowing the economic growth that fuels oil demand.
Fresh threats by rebel militia in Iraq against oil facilities and a fall in US crude stockpiles helped support prices.
US light crude set a record of $47.39 a barrel before easing to close at $47.27, up 52 cents on the day. London Brent rose as high as $43.40 a barrel, easing later to end at $43.03, up four cents on the day. US oil has set all-time highs in all but one of the last 14 trading sessions and is up $10 a barrel, or 27 percent, since the end of June.
German Chancellor Gerhard Schroeder said that, while high prices were a concern, global growth remained strong.
"We don't currently see any negative impact from the oil price and we still have very robust global growth," Schroeder told a press conference in Berlin.
The United States Tuesday said consumer prices fell in July for the first time in eight months, indicating underlying inflation pressures are largely under control in the world's biggest oil importer.
"The economy overall is unaffected by oil prices at this high level. That suggests retail oil demand will continue to be healthy," said Tony Nunan, manager at Mitsubishi Corp 's international petroleum business.
Beijing's bid to slow Chinese economic growth has yet to make much impact on energy demand.
China recorded 21 percent oil demand growth in the first half of the year and crude imports by the world's second-largest oil consumer are up 40 percent year-on-year to the end of July, according to recent data.
US oil demand so far this year is up 3.4 percent, preventing inventories from building much as rising consumption soaks up extra imports from Opec suppliers like Saudi Arabia.
US Energy Information Administration inventory data for the week ended August 13 estimated commercial crude stocks fell 1.3 million barrels to 293 million, the third week in a row that inventories have fallen.
The draw on crude stocks was roughly equal to oil production lost last week as companies shut platforms in the US Gulf on the threat of Tropical Storm Bonnie.
The EIA report also showed that despite soaring crude prices gasoline demand in the US strengthened, rising to nearly 9.4 million barrels a day in the four weeks ending on 13 August - 1.1 percent higher than the same period last year.
"It's all about demand and stocks," said Leo Drollas, chief economist at London's Centre for Global Energy Studies. "As long as there are only 18.5 days worth of US crude stock cover, prices will hold near $45 because any problem in supply anywhere in the world feeds directly into the futures price."
Leading Opec power Saudi Arabia said this week it is pumping as much as possible in a bid to lower prices to $25-$30 a barrel.
The Organisation of the Petroleum Exporting Countries in a report said it expected cartel output to reach 30 million barrels a day in August and 30.5 million bpd in September from 29.57 million last month.
"Any significant capacity is seen as unreliable - Iraq, Russia and Venezuela for instance. Ongoing violence in Iraq is reinforcing the mood," said David Thurtell, commodities strategies at Commonwealth Bank of Australia.
In Iraq, a group claiming links to rebel cleric Moqtada al-Sadr said it was responsible for setting an oil well on fire and vowed to attack the country's main southern pipeline if US forces do not leave the holy city.
Iraq's southern pipeline has been closed since a sabotage attack on August 9, restricting export flows through a second line to about one million barrels daily, half normal supply rates.
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