Oil prices rose more than $1 (€0.81) to fresh record highs yesterday as the US government reported another fall in heating fuel stocks ahead of winter.

US light sweet crude leaped $1.11 a barrel to $54.75 a barrel, up more than 65 per cent so far this year and a rapid rebound from a brief bout of profit-taking by big-money funds earlier this week.

London Brent crude for November rose 85 cents to $50.90 a barrel.

World prices have surged on fears that the US is running out of time to build winter fuel supplies, due in part to the impact of Hurricane Ivan, which damaged oil operations in the Gulf of Mexico last month.

US distillate stocks, including heating oil, fell by 2.5 million barrels to 120.9 million last week, to drop more than 8 per cent below last year, the US Energy Information Administration said yesterday.

US oil production in the Gulf of Mexico is still running at about 72 per cent of its normal rate of 1.7 million barrels per day (bpd) after pipeline and platform damage by Hurricane Ivan, the US Minerals Management Service said on Wednesday.

"Hurricane Ivan has turned an uncomfortably tight situation into one that is unsalvageable except at dramatically higher prices," said Mr Paul Horsnell of Barclays Capital.

Tight fuel stocks in Asia and Europe have magnified the price rise. Japanese kerosene supplies rose 4 per cent in the past week, but remain about 17 per cent below year-ago levels, according to industry data released yesterday.

German consumer stocks of heating oil rose by 3 per cent last month to 60 per cent of capacity on October 1st, but remained well below levels last year ahead of peak winter demand, trading sources said.

"There is a very serious problem in distillate markets on both sides of the Atlantic, and current prices are not high enough to ease it sufficiently," said Mr Horsnell.

OPEC president Mr Purnomo Yusgiantoro said yesterday that record oil prices would continue to rise through the end of October because of strong demand.

OPEC producers are pumping at just about full capacity to meet rapid demand growth, especially in China and the US.

The production surge has failed to cool prices as industrialised nations are short of the high-tech refining capacity needed to turn OPEC's dense, sulphurous crude into the transportation and heating fuels that consumers crave.

Demand growth in China, now the world's second-biggest energy consumer, is showing signs of slowing as the government restricts investment and lending to stop its booming economy overheating.

Limited import facilities could also curb the country's soaring demand for foreign crude unless plans for new terminals, pipelines and storage tanks are speeded up, oil traders say.

Even so, China's crude imports are expected to jump another 20 per cent next year.

A general strike in Nigeria over fuel prices, which stoked fears about the country's oil exports, was due to end at midnight.