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Written by: Staff

SINGAPORE, May 11 (Reuters) Oil climbed further above $72 on Thursday as worries over gasoline supply due to outages at two U.S.

refineries as the summer driving season looms, outweighed swelling inventories that rose above expectations.

U.S. light crude gained 33 cents to $72.46 a barrel by 0527 GMT, after rising by $1.44 on Wednesday. London Brent crude rose 28 cents to $72.72 a barrel.

''Gasoline demand is at its highest since August last year, before the hurricanes hit the U.S. It's significant because it shows that U.S. consumers are not so deterred by the high prices,'' said Dariusz Kowalcyzk, the chief investment strategist at Hong Kong-based CFC Securities.

''Demand for crude is also expected to rise as refineries come back into full operation and ramp up production for the summer.

Although the stock data is certainly bearish, I believe the market has already priced that in.'' CFC Securities estimates that U.S. gasoline demand, for the week ended May 5, was at 10.2 million barrels per day (bpd), the highest level since Aug. 19 when it was at 10.3 million bpd.

Weekly data from the U.S. Energy Information Administration (EIA), showed an increase of 2.4 million barrels -- double analysts' estimates of a 1.2 million-barrel rise -- to 205.1 million barrels, which had earlier triggered a price fall. S] Other analysts held the view that the gasoline stockbuild, which followed a surprise rise in the previous EIA report, along with the 0.1 percent drop in demand in the past four weeks from a year ago, showed that drivers may be tweaking driving habits to adjust to higher prices.

OUTAGES Outages at two refineries in the United States also led to the bullish tone, analysts said, but Kowalcyzk believes the impact is short-term.

The coking unit at Valero Energy Corp's Texas 243,000-bpd refinery was shut for seven days, reducing distillate production by 40,000 bpd and gasoline by 15,000 bpd.

ConocoPhillips Corp. has cut rates at its 263,000-bpd Bayway refinery in New Jersey due to problems with some units, believed to be its catalytic cracker.

''These two outages are not going to change fundamentals, although they probably added to the bullish sentiment, as the capacity loss is not large and not over an extended period of time,'' Kowalcyzk said.

Oil prices are just 4 percent off last month's record-high of $75.35, amid nagging concerns over Iran, supply losses in Nigeria and increased buying of commodities by investment funds seeking to beat returns available in equities and bonds.

Gold hit a quarter-century peak of $712.50 an ounce, while copper surged to record-highs above $8,200 a tonne.

The killing of an executive with U.S. oil services firm Baker Hughes Inc. in Nigeria highlighted the risks in the world's eighth-largest oil exporter where militant raids have already cut crude exports by a third.

But Iranian President Mahmoud Ahmadinejad, on a visit to Indonesia, adopted a more conciliatory tone amid the stand-off with the West over Tehran's nuclear aims, saying he was ready to engage in dialogue with anybody.

He added that the country's nuclear programme was peaceful and had no military purpose, disputing Western fears that it was a cover for making nuclear weapons.


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