LONDON – Oil prices struck a 10-month high above $73 a barrel on Tuesday on strong summer driving demand in top consumer the United States.
London Brent crude, seen as the best price gauge of the global oil market, settled 30 cents to $72.93 a barrel after rising to $73.10 earlier, the highest since August 25.
U.S. crude settled up 32 cents to $71.41.
Experts have been concerned about U.S. gasoline supplies as domestic refiners strain to meet rising summer demand. U.S. refiners have faced a long, deep maintenance season that helped draw down refined product inventories ahead of the summer.
Unexpected refinery outages have also plagued the U.S. market, with Coffeyville Resources shutting a 108,000 barrels per day refinery in Coffeyville, Kansas, following flooding.
"All of the ducks are lining up in terms of upward price pressure," said Frances Hudson, investment director at Standard Life Investments.
"We're reaching the peak of the driving season and I do wonder how much we are also seeing a rise in the geopolitical element of the oil price," she added, referring to attempted bombings in London and an attack on Glasgow airport.
Police suspect an al Qaeda plot and the attacks have helped put some markets on edge.
Although crude stocks in the United States are at a nine-year high, some analysts are forecasting they will drop rapidly as refiners there return from maintenance.
The next snapshot of U.S. fuel stocks is due on Thursday, a day later than usual because of the Independence Day holiday on July 4.
A Reuters poll pointed to a decline of 700,000 barrels in U.S. crude inventories and a 0.9 percentage point rise in refinery operations.
The International Energy Agency, representing 26 consumer nations, repeated its call on Monday for the Organization of Petroleum Exporting Countries to increase output.
So far, the group, which pumps over a third of the world's oil, has resisted, arguing crude oil supplies are ample and any tightness in refined products is beyond its control.
According to a Reuters survey, OPEC kept a lid on output in June, pumping 30.19 million barrels per day. The 10 members subject to production limits produced 26.64 million bpd, up 50,000 bpd against May.
"The issue is not oil production. We have enough ... oil in the market," Venezuelan Energy Minister Rafael Ramirez told an Iranian newspaper in remarks published on Tuesday.