Brent crude oil prices held near 11-month highs on Monday, after rising more than 1.5 percent in the previous session on nagging supply worries due to North Sea production problems and US refinery outages. London Brent crude was down 2 cents at $77.55 a barrel.
It closed $1.17 higher at $77.57 a barrel on Friday, after reaching an intrude high of $77.68 a dollar short of last August's $78.65 all-time record. US crude for August delivery was 6 cents higher at $73.99 a barrel a fresh 11-month high and not far from a record high of $74.81 set in August 2006.
Analysts and traders said oil prices are likely to creep higher on bullish demand sentiment and as political tensions in major producers Iran and Nigeria continue to persist.
"The markets will retain focus on North Sea production problems and refinery outages in the week ahead. These factors will continue to support prices at the current levels," said David Moore, a commodity analyst at Commonwealth Bank of Australia.
Oil has gained more than $6 in two weeks on a wave of buying by funds during the US summer vacation season, catapulting Nymex crude futures and Brent crude to 11-month highs. Speculators in the New York Mercantile Exchange crude oil market boosted net long positions to a record high in the week ended July 1 in a strong bet prices would rise, the Commodity Future Trading Commission said on Friday.
Speculative net long positions in the Nymex heating oil and gasoline markets also rose, hitting their highest levels in years, according to the CFTC data.
North Sea oil and gas production could be affected for weeks after a ship's anchor damaged a pipeline needed to export associated gas to Britain, industry sources have said.
Analysts said BP Plc's plans to restart a 60,000 barrels per day (bpd) ultracracker over the weekend at its recovering giant Texas refinery would also help ease concerns over gasoline supplies.
Separately, forecasts for rising demand in 2008 would also reinforce bullish sentiments and support prices, analysts said. World oil demand will grow more quickly in 2008, though higher production and refinery capacity should ease pressure on supply, the International Energy Agency said on Friday.
Commonwealth Bank's Moore said the market would also begin to focus on upcoming autumn and winter heating demand in the Northern Hemisphere. "The supply environment is likely to remain tight and that will keep prices at a fairly solid level," he said.
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