Oil prices close in on record 130 dollars

Oil prices headed towards a record high of 130 dollars a barrel on Wednesday on anxiety about stretched supplies in the face of strong demand for energy, analysts said.

New York's main oil futures contract, light sweet crude for July delivery, rose 22 cents to 129.20 dollars a barrel. On Tuesday it reached an all-time high of 129.60 dollars.

London's Brent crude contract for July climbed 48 cents to 128.32 dollars a barrel on Wednesday after spiking to a record summit of 128.53 dollars earlier in the day.

Tony Nunan, of Mitsubishi Corp.'s international petroleum business, said concerns over supplies not keeping up with demand were driving prices higher.

"The market is technically and fund-driven right now," he said on Wednesday, referring to investors buying into oil in hopes for higher returns.

David Moore, a commodity strategist at the Commonwealth Bank of Australia, said a weaker US dollar and "the recent trend for analysts to revise higher their oil price forecasts" are helping to push up prices.

Moore added there were reports that the need for diesel-fuelled power generation in earthquake-affected areas of China was boosting demand for the fuel.

The Chinese government said on Tuesday the death toll from the 8.0 magnitude earthquake that devastated the nation's southwest on May 12 had risen to 40,075.

Despite calls by the United States for the Organization of Petroleum Exporting Countries to raise output to cool prices, OPEC president Chakib Khelil said on Monday that the oil cartel would take no decision on production before a meeting in September.

Analysts said a decision by Saudi Arabia to raise output had not done much to lower crude prices. Many OPEC officials argue that record oil prices are being driven by speculators.

Oil prices have jumped more than a quarter since the start of 2008, when they struck 100 dollars a barrel for the first time.