Oil surges To New High - $77

Oil surges to new high above $77 a barrel

LONDON (Reuters) - Oil leapt to a fresh 11-month high above $77 a barrel on Friday, lifted by lingering supply concerns and a rush of speculative money into the commodity.

Also supporting the market, the International Energy Agency (IEA) -- in its second assessment of the world market in a week -- predicted fuel demand would grow more quickly next year despite near-record prices.

London Brent, seen as the best indicator of the global market, rose 82 cents to $77.22 a barrel by 1:08 p.m., after earlier reaching a new 11-month high of $77.45. The benchmark is within sight of last August's $78.65 record.

Oil has gained more than $6 in the past two weeks on speculative buying by funds that have noted strong demand in top consumer the United States in the peak summer driving season.

U.S. crude gained 33 cents to $72.83 a barrel -- still way below Brent which has advanced on reduced North Sea crude supplies due to maintenance.

The IEA said on Friday oil demand will grow more quickly in 2008 than this year, boosting the need for OPEC crude.

But higher output and refinery capacity should ease pressure on supply, the adviser to 26 industrialised nations argued.

"We see a slightly easier situation in several ways," said Lawrence Eagles, head of the IEA's Oil Industy and Markets Division. "Total crude and liquids growth is in excess of demand growth."

The IEA report has traced a picture of continued market tightness going into 2008, Barclays Capital in a research note. "The obvious consequence is an increased need for OPEC crude."

Dealers remain anxious over supplies from countries such as Nigeria and Iran, but most traders attribute much of oil's latest rally to a fresh infusion of fund money.

"There is no lack of crude supply fundamentally, but funds are betting on a more bullish market, hence a great deal of buying," said Tetsu Emori of Astmax Futures in Tokyo.

Consumer nations have called repeatedly for members of the Organization of the Petroleum Exporting Countries to pump more to lower prices. OPEC ministers have rejected the call, saying markets are amply supplied.

An Iranian oil official reiterated on Friday that a surge in oil prices was not due to a lack of supply in the market.

OPEC is due to meet next in September.