Oil neared another 11-month high on Tuesday, extending nine days of gains that have lifted crude by $6 to within striking distance of its record above $78.

The rally to an 11-month high of $76.34 a barrel on Monday has coincided with a big rise in investment flows. Speculators boosted their long positions in the New York Mercantile Exchange crude oil market to a record in the week to July 3.

At 1448 GMT London Brent crude, currently seen as the best indicator of the global market, was up 34 cents at $76.12. U.S. crude was up 54 cents at $72.73.

Citigroup analysts calculated the influx of investor money accounted for over $10 of the move higher since the start of 2007, when Brent crude oil was below $60 a barrel.

Financial players have now firmly moved ahead as the main near-term driver of oil prices, Citigroup said.

The rally in oil and other commodities at the start of the third quarter has lifted the 19-contract Reuters-Jefferies CRB Index to its highest this year.

It has also had a knock-on effect on the share prices of energy companies. The FTSE Global Energy index has risen 18 pct since the start of the year and over 25 percent in the last four months.

There is a steady flow of fund money coming in, said Markus Mezger, partner at Tiberius Services AG, a Swiss-based asset manager in commodities futures.

Olivier Jakob, an analyst at Swiss-based Petromatrix, noted the continued rise in prices and open interest -- the number of contracts that have not been closed -- pointed to more investment money flowing into oil in recent days.


Predictions that consistently high oil prices would act as a brake on economic growth have yet to be borne out.

The world has demonstrated it can live with $70 oil, said analyst Geoff Pyne of EnerpyLtd.com.

There are no huge inflationary risks from oil and economic growth is picking up outside the United States.

Barclays Capital technical analysts, who study charts of past price movements, forecast a period of consolidation for Brent crude above $72 ahead of a run at $78.65, the record touched in August 2006.

Retracement levels of the 2006/07 fall have been swept aside on both sides of the Atlantic, they said.

Societe Generale concluded the signals were clearly bullish.

Last year's highs are the next targets, the bank wrote.

Mark Mathias of hedge fund Dawnay Day Quantum said he was looking for oil to test $80 this year.

Supply worries have spurred the rally.

The main focus of concern at present is Nigeria, the world's eighth biggest oil exporter, where militant attacks have shut around 20 percent of production.

European oil stocks data released on Tuesday showed gasoline inventories fell 2.1 percent last month as exports to the United States bolstered lower-than-usual stocks of the motor fuel there. Industry monitors Euroilstock also reported a 1.2 percent drop in Europe's crude oil stocks in June.

On Wednesday, the U.S. Energy Information Administration will publish its latest snapshot of oil supplies in the world's top consumer. Analysts expect a decline in crude stocks from a nine-year high and a rise in gasoline and distillates.

(Additional reporting by Jiwon Chung in Singapore and Jane Merriman, Peg Mackey and Santosh Menon in London)