The US government said it was considering an oil industry request to open up its 700-million-barrel Strategic Petroleum Reserve after the hurricane battered crude production on the southern coast and in the Gulf of Mexico.

New York's main contract, light sweet crude for delivery in October, reached an all-time high of 70.85 dollars a barrel, beating the previous record of 70.80 dollars reached Monday.

The contract finished at 69.81 dollars a barrel, up 2.61 dollars on Monday's close.

In London, the price of Brent North Sea crude oil for delivery in October rose 2.70 dollars from Friday's close to end at 67.57 dollars a barrel, off a new high of 68.89. British markets were closed Monday for a national holiday.

"The advance of prices again today indicates that participants believe that there is at least a significant amount of damage" caused by Katrina, Fimat analyst Mike Fitzpatrick said.

According to US government data, Katrina has shut down an estimated 95 percent of crude production and 88 percent of natural gas output in the Gulf of Mexico -- which accounts for a quarter of total US oil output.

A total of 735 oil and natural-gas rigs and platforms remained evacuated, according to the federal Minerals Management Service.

At least five big Gulf Coast refineries were shut, as was the Louisiana Offshore Oil Port -- the nation's only deep-water oil terminal.

After oil companies conducted flyovers of their operations in the Gulf of Mexico, three rigs were reported missing in the hurricane and at least nine were said to have lost their moorings.

"Previous to the storm there was a fairly tight supply-and-demand balance and these losses will be acutely felt," Fitzpatrick said.

After the US government said Monday that it could release strategic crude reserves to keep refiners supplied, the Organization of the Petroleum Exporting Countries said the soaring cost of oil was out of line with fundamentals.

"We are concerned that prices continue to go up beyond what fundamentals call for," acting OPEC Secretary-General Adnan Shihab-Eldin said during an energy conference in Oslo on Tuesday.

The market was also digesting a pledge by oil kingpin Saudi Arabia to raise its output to make up for supply losses caused by Katrina, but dealers said prices were unlikely to recede until the extent of damage is established.

"It's the most sensitive area for US crude supply so the market is certainly going to be on watch to see the implications," said Mark Pervan, a commodities analyst with Daiwa Securities.

"I don't think there will be much selling until the damage report is out... it's still very jittery," he added.

"If it turns out that there is significant damage done particularly to refineries, then there might be a strong reaction from the markets," said Victor Shum, an analyst with energy consultancy Purvin and Gertz.

"A lot will depend on the assessment of the damage."

Wachovia bank said as much as 10 percent of US refinery capacity was now expected to be closed for at least two weeks.

Extra supplies from the US strategic reserve could help calm the market, Wachovia economist Jason Schenker said, after the government said Tuesday it had got its first formal industry request for a loan of oil.

But he added: "At the end of the day, it may not matter for gasoline and heating oil prices how much crude comes out of the SPR.

"After all, it will not matter how much crude is available if the refineries are shut down and can't run the crude they have."

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