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Oil prices shoot up to new record

Oil prices have surged to fresh record highs again after a surprise drop in US petrol stocks added to worries about a gathering storm in the Caribbean.

Tropical Storm Katrina could threaten oil production in the Gulf of Mexico, analysts warned, while a 2% slump in US supplies signalled a thirsty market.

US light crude closed at a new high of $67.40 a barrel, up $1.69 on the day, topping the previous high of $67.10.

Meanwhile, in London, Brent crude closed up $1.36 to $66.01 on Wednesday.

News that Iran's parliament had rejected the new president's choice of oil minister also spooked markets, analysts said.

This drew an unwelcome question mark over oil policy in the Opec cartel's second-biggest producer.

Jittery markets

Oil traders fear if Katrina gets out of hand there could be a repeat of the months-long disruption to oil and gas production last year in the Gulf of Mexico which was triggered by Hurricane Ivan.

The peak period of hurricanes in the region is usually from August to September so traders are on tenterhooks.

"The fear of a replication of that is going to keep the market on its toes and we could easily test $70 a barrel," said Marshall Steeves, analyst at Refco Group.

In its weekly petroleum supply report, the US Energy Department said domestic stocks of gasoline fell by 3.2 million barrels last week to 194.9 million barrels.

However, other traders said supplies of oil, natural gas, petrol and other products were adequate for this time of year.

The ongoing rally in oil prices was more a reflection of fears about unexpected disruptions in supplies at a time when demand is strong, they explained.

"A lot of this is 'just in case' buying," said oil broker Mike Fitzpatrick at Fimat USA.

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