Oil resumed its march towards record highs on Thursday, climbing above $77 a barrel after a surprise drop in gasoline stocks in the United States and heightened supply concerns in Africa.
The market leapt on Wednesday after U.S. inventory data showed refineries running harder and failing to build up fuel stocks. A cut in supply from Angola, OPEC's newest member, added further support.
London Brent crude was up 56 cents at $77.32 by 1414 GMT. On Monday it rose to within 25 cents of last August's $78.65 all-time high and some expect prices to head towards that peak again.
The data showed surprising declines and we now have to prepare for more upside. There is good potential for Brent to test its record $78.65, said Sano Keiichi at Tokyo-based Sumitomo Corp.
U.S. crude, which has risen more than $7 over the past three weeks, was up 56 cents at $75.61 a barrel after a $1.03 jump on Wednesday.
Wednesday's U.S. inventory report showed robust consumption and slower imports drained gasoline inventories by 2.3 million barrels in the week to July 13, versus expectations of a 900,000-barrel rise.
A supply loss in Angola also bolstered prices. A technical problem prompted Total to shut half of the output at its 220,000-barrel-per-day (bpd) Dalia oilfield in Angola.
Force majeure was declared on exports. Total said it expects to resume full production in the next day or two.
The cutback added to supply disruptions from Africa's OPEC members. Production in Nigeria is down by nearly a fifth, or 547,000 bpd, because of attacks by militant groups.
In spite of the disruptions, the Organization of the Petroleum Exporting Countries has shown no sign of relaxing its supply curbs and the group's restraint is helping prices climb, say analysts.
There's now a strong expectation that the crude oil market's going to tighten up significantly in the next few months, said Kevin Norrish of Barclays Capital. I think prices will go higher in the short term.
Barclays on Wednesday raised its 2008 forecast for Brent crude by $7.40 to $73.60, citing its view that there will be no growth in supply from countries outside OPEC next year.
Also adding support, China's economy continued to gallop ahead, with annual GDP growth accelerating to 11.9 percent in the second quarter, a faster-than-expected pace in the world's second-largest oil consumer.
China's crude oil imports in the first half of the year were up 11.2 percent from a year ago at 3.29 million bpd.