Oil prices rose last week as signs of economic recovery in the United States and Japan strengthened the demand outlook at a time when fuel stocks ahead of the northern winter are running low.
Brent crude in London rose 30 cents to $29.74 a barrel, within a dollar of five-month highs struck earlier this month. New York crude futures rose 33 cents to $31.83.
News that the US economy grew faster than thought in the second quarter, and that Japanese industrial output rose more than expected last month gave fresh signals that global economic recovery may be gathering pace.
US gasoline demand, which soaks up 12 per cent of world oil supply is already strong, with record consumption draining stocks to their lowest level in nearly three years.
The upcoming Labour Day holiday weekend will see 28.2 million people driving 80 kilometres or more - an eight-year high and up 2.2 per cent from a year ago - according to the American Automobile Association.
Oil prices have risen more that 25 per cent over the past four months as export disruptions from Venezuela, Nigeria and Iraq prevented US stocks rebuilding after being run down during a severe northern hemisphere winter.
Heating oil stocks in the United States are 20 per cent below last year. The US government last week also reported a smaller-than-anticipated climb in supplies of fellow heating fuel natural gas, leaving stockpiles well below year-ago levels and sharpening the threat of a supply crunch in a cold winter.
Venezuela and Nigeria are still pumping below optimum levels, and occupation powers in Iraq face stubborn sabotage and looting in their efforts to restore output.
While Iraqi production is improving officials are worried that could be temporary amid sabotage that has repeatedly disabled a key export pipeline from the north, which Turkish officials say should resume operation on September 4.
A top S army commander said Iraqi output stood at 1.7 million barrels per day as of last Wednesday. Pre-war Iraqi production capacity was 2.8 million bpd with export capacity of 2.2 million bpd.