Oil prices have scrambled back over $50 a barrel amid a prolonged production outage in the Gulf of Mexico at a time when major exporters are already pumping nearly full tilt.
Supply anxiety is building ahead of the northern hemisphere winter, when demand for heating oil surges. Inventories of crude and distillates in the world's top energy user, the United States, are running up to 4 per cent below last year.
US light crude reached a session high at $50.30 a barrel, the highest price since the record $50.47 one week ago. In early trade on Tuesday, US crude was 37 cents up at $50.28. London's Brent crude rose 37 cents to $46.56 a barrel.
In the US Gulf of Mexico, nearly 29 per cent , or about 480,000 barrels per day, of oil output remained shut, three weeks after Hurricane Ivan first hit the region.
Dealers will now look to US oil inventory data, due out tomorrow, to gauge how comfortable oil supplies are in the weeks ahead of the winter.
Oil prices fell yesterday after Nigerian rebels withdrew a threat to target the country's over 2.3 million bpd of oil production facilities, but concerns lingered over the OPEC member's stability in the near term.
Iraq also remains volatile, with saboteurs regularly attacking pipelines. On Monday an internal line linking the country's north and south fields was hit, although this did not affect exports.
Together the two countries produce over 4.5 million bpd - more than twice the amount of spare production capacity held by OPEC.
Market bulls are also encouraged by signs that speculative funds, a major factor in this year's steep oil price rally, continue to buy into the market, despite the highest prices on record.