SINGAPORE (AP) - Oil prices pressed gains and approached record highs on Tuesday amid heightened supply worries linked to disruptions in Nigeria and international tensions over Iran's nuclear program.
Analysts said crude oil prices were likely to climb as long as these geopolitical risks posed threats to supply at a time when global demand remains strong and supplies remain tight.
Light, sweet crude for May delivery rose 30 cents to $70.70 a barrel in electronic trading on the New York Mercantile Exchange. The contract on Monday jumped $1.08 to settle at $70.40 a barrel, a record close.
Oil prices were approaching the intraday record high of $70.85 set Aug. 30, when Hurricane Katrina lashed at the U.S. Gulf Coast and wreaked havoc on the region's oil industry. The contract settled that day at $69.81.
 | (AP) Traders work the oil options pit at the New York Mercantile Exchange, Monday, April 17, 2006. Crude...
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Crude oil production is only barely keeping up with rising global demand, leaving a slim margin for error in the event of a prolonged supply interruption, experts say.
Traders are anxious that that U.S.-led efforts to stop Iran, OPEC's second-largest member, from pursuing a suspected nuclear weapons program would lead to a disruption in Persian Gulf supplies.
And in Nigeria, militant attacks have led to the stoppage of more than 25 percent of the country's crude oil production.
"The Iran issue is the driver of the day, the extra factor causing the run-up in prices, but the basic thing underlying the industry is that global demand remains very strong," said Tobin Gorey, a commodities strategist at the Commonwealth Bank of Australia in Sydney.
"The market is still reacting to the Iran issue as we saw last week that the war of words got stronger, there's a sense that things are moving faster, and that's pushing the price higher still, while Nigeria remains on the back-burner," Gorey said.
Another expert said prices were reaching new highs now because gasoline inventories in the world's largest energy consumer, the United States, have been shrinking at a time when the country is gearing up for the peak demand summer.
"The market sentiment now is much more nervous," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo. "Things haven't changed so much but as we approach the summer driving season we'll need more crude to make gasoline and we know also that U.S. gasoline production has its limitations because of the tight refining capacity."
According to a midweek report from the U.S. Department of Energy on Wednesday, gasoline inventories dropped 3.9 million barrels in the week ending April 7 to 207.9 million barrels - down nearly 2 percent from year-ago levels.
Gasoline futures Tuesday rose 0.43 cent to $2.1740 a gallon, while heating oil prices gained 0.6 cent to $2.0289 a gallon. Natural gas futures rose 0.3 cent to $7.580 per 1,000 cubic feet.
