Oil hits record on supply fears

Oil hits record on supply fears

Prices have been above $70 for much of the past year

Oil prices have hit another record - breaching the $81 a barrel mark for the first time.

US light, sweet crude hit $81.01 in after hours trade on worries about rising demand amid constrained supply.

Supplies of oil in the US are running at their lowest level in eight months with fears that world energy supplies will hit critical levels this winter.

The Organization of the Petroleum Exporting Countries (Opec) last week agreed on a small supply increase.

But analysts do not believe the 500,000 barrels per day hike in output is sufficient to stem the rally in oil prices.

"We believe that this will be too little, too late, barring an outright collapse in demand, and now expect inventories to draw to critical levels this winter," said investment bank Goldman Sachs.

The firm predicted that oil prices would hit $85 a barrel by the end of this year.

In London on Monday, Brent crude rose 76 cents to $76.98 a barrel.