OIL prices crept towards a record high last night as disruption in Iraq and the effect of the hurricane season took their toll.

The cost of a barrel of crude reached $49.36 in electronic trading in New York, only slightly below the record $49.40 reached late last month.

Analysts said the levels were uncomfortably high, although some questioned whether the price would reach $50 a barrel.

In London, Brent crude was just below last week's record of $45.75 a barrel.

The price of crude has risen sharply during the past week after it emerged that US stockpiles had fallen faster than expected.

High demand and short supplies have been worsened by factors including disruption in Iraq, fuelling concerns over the amount of oil available to meet winter demand.

Hilary Cook, of Barclays Stockbrokers, said the cost of crude was uncomfortably high, but said she expected it to fall back rather than rise above $50.

She said she believed this was a short-term hiccup that had been caused partly by the impact of the weather.

Richard Slape, oil analyst at stockbroker Seymour Pierce, said continued disruption in Iraq and clashes in Saudi Arabia were among the factors that triggered the latest rally.

US oil prices retreated from record levels in the past month but returned to higher levels last week, following new data on US stockpiles.

Repeated attempts by oil cartel Opec to increase production have had limited success as demand from China and India continued to grow.