Oil price remains above $71

Oil prices crept lower today as traders paused after a two-day rally fuelled by concerns over US refiners' ability to meet demand and fresh anxiety over the Middle East.

London Brent crude for August delivery, the new front-month contract, was down 17 cents at $71.19 a barrel earlier, while US July crude eased 12 cents to $67.53 a barrel.

Traders said follow-through buying after Wednesday's weekly oil inventory report that showed surprisingly flat petrol levels in the United States and falling heating fuel supplies had boosted prices, raising fears refiners would struggle to build up stocks.

Heating oil price gains again outpaced crude today, with the product's premium to crude rising another $1 to its highest close since late 2005, amid fears of a looming struggle to build up enough pre-winter heating fuel inventories.

Markets were rattled on Thursday after Hamas gunmen seized control of Gaza, prompting Western-backed President Mahmoud Abbas to declare a state of emergency and raising the risk of wider conflict that could draw in nearby producers.

Against a backdrop of potentially tightening oil markets later this year as winter demand rises, some dealers were factoring in a greater geopolitical risk premium.