Oil surges past $77 as supply concerns mount

By Matthew Robinson

NEW YORK (Reuters) - Oil prices surged nearly $1 to top $77 a barrel on Thursday, within sight of a record high due to gasoline supply concerns in the United States and production problems in Angola.

Strong economic news from China, the world's second biggest energy consumer, showing economic growth surged to an 11-1/2 year high of 11.9 percent in the second quarter, also pushed oil prices higher.

London Brent LCOc1 crude settled up 91 cents at $77.67 a barrel, the highest since August 7, 2006. It traded as high as $77.78, closing in on the record $78.65 hit last August. U.S. crude CLc1 rose 87 cents to $75.92 a barrel.

Total (TOTF.PA) declared force majeure on exports from its 220,000 barrel per day Dalia oil field in Angola, after a technical problem shut half its output.

The French firm said it expected to resume exports in the next day or two, but the disruption heightened concerns about supplies from Africa. Output from Nigeria is down nearly 20 percent, or 547,000 bpd, due to militant attacks.

"Angola got (the oil price rise) started, but the China GDP was very supportive," said Phil Flynn, analyst at Alaron Trading.

"The combination, with yesterday's data, is pushing prices higher," Flynn added. "Everybody is ratcheting up their demand expectations from where they were a few months ago."

Prices soared on Wednesday after U.S. inventory data showed refineries running stronger last week 13 and failing to build up fuel stocks.

Gasoline stocks fell by 2.3 million barrels, against forecasts of a 900,000-barrel rise, as refiners continued to struggle to keep up with summer driving demand in the giant consumer.

"The data showed surprising declines, and we now have to prepare for more upside. There is good potential for Brent to test its record $78.65," said Sano Keiichi of Tokyo-based Sumitomo Corp.

Rising crude imports from China, up 11.2 percent in the first half of the year, also helped support prices.

Despite ongoing supply concerns, the Organization of Petroleum Exporting Countries has shown no sign of relaxing its output curbs, which have helped push prices up.

"There's now a strong expectation that the crude oil market's going to tighten up significantly in the next few months," said Kevin Norrish of Barclays Capital. "I think prices will go higher in the short term."

Barclays on Wednesday raised its 2008 forecast for Brent crude by $7.40 to $73.60, citing its view that there will be no growth in supply from countries outside OPEC next year.

(Additional reporting by Maryelle Demongeot in Singapore and Alex Lawler in London)