Oil refineries warn they may not have enough crude oil resulting in further price hikes.
Fuel prices appear set to increase by the end of the month after the International Energy Agency warned that many refineries around the world seem unable to process sufficient quantities of crude oil.
The Paris-based organisation, which acts as an energy adviser to 26 developed countries, made the comment after crude oil prices reached a 10-month high in New York on fears that refinery breakdowns would slow US petrol production.
According to a survey published in the US, refinery output was just over 90 per cent last month, compared with more than 93 per cent at the same time last year.
In Singapore yesterday crude oil for August delivery was at $US71.31 a barrel, down US10c on the New York close on Tuesday.
The August contract had risen US32c, or 0.5 per cent, to $US71.41 a barrel during Tuesday, reaching its highest close since August 25.
On the London market, which accounts for more than 80 per cent of the world's traded oil, a barrel of Brent crude was down US5c to $US72.88 a barrel.
Both markets have been affected by the US Independence Day holiday, which delayed the scheduled release of data on US fuel inventories by one day.
Demand for petrol in the US, the world's biggest oil user, usually peaks between June and August as summer holiday travel puts more cars on the road.
Oil reached its record of $US78.40 on July 14 last year when increased demand coincided with the release of forecasts indicating an above-average US hurricane season.
But prices declined 26 per cent in 11 weeks as holiday driving demand eased and the hurricane season passed without any major damage to oil and gas production assets.
In its latest report the Australian Institute of Petroleum said that unleaded petrol prices across the country were trending down at 121.7c a litre.
They have fallen 3c per a litre in the past month but are still ahead of the 118.5c a litre they've averaged during the past 12 months.
The consumer watchdog, the ACCC, has been instructed by the federal Government to investigate why retail petrol prices have not moved in line with movements in the Singapore benchmark price for motor gasoline.
The ACCC investigation will report by mid-October.
