LONDON, August 14, 2008 (AFP) - World oil prices extended gains on Thursday after data showing an unexpectedly sharp decline in US motor fuel reserves during the peak demand season, analysts said.

New York's main contract, light sweet crude for September delivery, gained 13 cents to 116.13 dollars per barrel. It had rallied 2.99 dollars on Wednesday.

London's Brent North Sea crude for September delivery rose 30 cents to 113.77 on Thursday after adding 2.32 dollars the previous day.

Prices have rebounded strongly since hitting a four-month low point near 110 dollars in London on Tuesday.

The US Department of Energy reported on Wednesday that US reserves of petrol, or gasoline, had fallen by 6.4 million barrels in the week ended August 8. That was worse than forecasts for a drop of just 2.0 million barrels.

'Crude futures were a little higher (on Thursday) as the bullish US report continued to lift oil markets,' said Sucden analyst Nimit Khamar.

Petrol inventories are closely watched at this time of year as American motorists hit the highways for their summer vacations, typically pushing up demand for gasoline, which is refined from crude oil.

'Crude has regained some of its losses over the past few trading sessions reacting to the inventory report which showed very substantial stock draws in gasoline,' said energy analyst Victor Shum at Purvin and Gertz in Singapore.

Despite the rally, Shum said that slowing global energy demand resulting from the weakening economies of the United States, Europe and Asia was likely to weigh down on oil prices.

The market at the moment appeared to be ignoring supply-side issues that could arise from geopolitical risks, he added.

'Concerns about the US economy and now the spread of the economic slowdown to Europe and Asia could push crude oil pricing to test lower lows because some of the supply issues have been discounted by the market,' Shum said.

Dealers said that fears of supply disruption had receded after Russia and Georgia agreed to a French-brokered peace plan following several days of hostilities.

British energy giant BP, meanwhile, said on Thursday that it had resumed pumping gas into the South Caucasus pipeline in Georgia and that the Baku-Supsa oil link remained shut.

On Tuesday, BP had stopped pumping into the South Caucasus pipeline (SCP), which snakes from Baku in Azerbaijan into Georgia and to the Turkish border, as a precautionary measure amid fighting between Russian and Georgian troops.

BP's Baku-Supsa oil pipeline remains shut but oil and gas supplies continue to flow from the Caspian Sea to the West by other routes.

Supply from the region is already hampered by the closure of the key Baku-Tbilisi-Ceyhan (BTC) oil link, which BP also operates.