Oil above $74 amid North Sea worries

LONDON - Oil prices rose Monday amid concerns over production in the North Sea. OPEC also said it expected refinery problems to affect the market next year.

August Brent rose 9 cents to $77.66 a barrel, retreating from an 11-month high of $78 earlier in the day on the ICE Futures exchange in London.

Light, sweet crude for August delivery gained 16 cents to $74.09 a barrel on the New York Mercantile Exchange by midday in Europe. The contract had risen $1.43 to settle at $73.93 on Friday, after rising as high as $74 earlier in the session. The last time a front-month contract traded or closed over $74 was Aug. 11 last year.

Crude oil prices in New York have followed recent gains in Europe's Brent crude, which has been rising since Thursday when Chevron Corp. and ConocoPhillips said the closure of the North Sea's Central Area Transmission System gas pipeline would reduce oil production at two fields.

Brent traders worry that some oil supplies might be cut, analysts said.

"The thing is when you have problems like this, it's like 'shoot first, ask questions later.' So they buy (oil) and ask questions later," said Tobin Gorey, commodity strategist with the Commonwealth Bank of Australia in Sydney.

In its monthly report, the Organization of Petroleum Exporting Countries said its estimated daily output last month fell more than 3 percent, or nearly 100,000 barrels, on the month to 29.98 million barrels, a decline led by shortfalls from Iraq.

Next year will see refinery problems continue to exert "further upward pressure, despite the healthy crude market," the report said. Qatar's Oil Minister Abdullah bin Hamad Al-Attiyah said Monday there is no need for OPEC to meet urgently to deal with rising prices.

"There is no shortage in the market for crude," Al-Attiyah told Dow Jones Newswires.

Al-Attiyah blamed high prices on a global shortage of refining capacity and tension in oil-producing regions.

"I don't have a magic solution," he said. "None of my customers are panicking for more oil."

A report Friday from the International Energy Agency saying global energy consumption in 2008 will likely rise at its fastest clip in recent years also supported prices.

The IEA report also said, though, that oil prices persisting above $70 a barrel may steadily eat away at demand.

Nymex heating oil futures rose 0.69 cent to $ 2.1175 a gallon, and natural gas futures lost 20.6 cents to $6.456 per 1,000 cubic feet.