Brent North Sea crude for July delivery shot up to $70.35, a price last seen on September 1 2006.

It later stood at $69.90 in electronic trading, down 37c on Thursday"s close.

New York"s main oil futures contract, light sweet crude for delivery in June, dipped one cent to $64.85/barrel in electronic deals before the official open of the US market.

Earlier on Friday it reached $65.20, the highest point since May 1.

Crude futures had surged by more than $2 on Thursday as the market focused on problems at US refineries ahead of the high-demand season for motor fuel, and unrest in oil producer Nigeria.

"The market is consolidating after an impressive surge yesterday, on the back of concerns about problems at US refineries and low gasoline stocks for this time of year," Sucden analyst Michael Davies said in London.

US government data puts gasoline (petrol) inventories are more than 7.0% below their five-year average for mid-May.

Dealers said the market remained concerned whether US refineries could meet gasoline demand when Americans take to the highways during the holiday driving season which begins in two weeks.

The US department of energy said on Wednesday that gasoline reserves had risen by 1.7 million barrels to 195.2 million in the week ending May 11, above the increase of 1.0 million barrels forecast by analysts.

The gain followed an increase of 400 000 barrels the preceding week after steady falls for three months.

US crude oil inventories rose 1.0 million barrels to 342.2 million, compared with forecasts for a gain of just 125 000 barrels.

"Crude oil prices now have a bias higher," analysts at the Commonwealth Bank of Australia wrote on Friday.

The market was also tracking events in Nigeria, the world"s sixth-biggest crude producer, where recent rebel attacks on energy facilities have slashed output there by about one-quarter.

On Tuesday, Hercules Offshore Inc decided to scale down operations in southern Nigeria because of unrest, following a similar decision by one of its major clients, Chevron.

Against the background of supply concerns, the International Energy Agency (IEA) revealed this week that it plans to ask oil producers cartel Opec to increase output by the middle of the year to avoid a cut in oil stocks.

IEA President Claude Mandil said he planned a bilateral meeting with the Organization of Petroleum Exporting Countries to discuss the supply situation.

The IEA and Opec are at odds over the need to pump more crude to ease prices. Opec said Tuesday that it expected global demand for oil to be 85.4 million barrels per day in 2007, the same estimate as in recent months.

PIN/Fin24.Co.Za