Crude oil in New York gained 2.3 percent this week after U.S. inventories unexpectedly fell to a two year low. Thursday, oil reached US$96.24 a barrel, the highest since trading began in 1983. The contract was at US$93.52 a barrel at 2:50 p.m. in Singapore Friday. The cost of shipping also rose.

"LPG continues to be driven by record crude," said Hiroki Ito, trading manager at Total SA's unit in Singapore. "Gains in freight rates are also adding to the cost of cargoes."

Saudi Aramco, the largest supplier to Asia, on Oct. 29 boosted prices for cargoes loading in November to a record. The Dhahran, Saudi Arabia-based company increased propane prices for November by 14.1 percent to US$730 a ton from October. The company raised butane prices by 13.5 percent to US$755 a ton for November.

Inventories of propane in the U.S., the largest LPG user, are "below the average range for this time of year" even though production and imports rose, the Energy Department said in its Oct. 31 report.

Stockpiles rose 940,000 barrels to an estimated 61.9 million barrels in the week ended Oct. 26, Energy Department data showed. Total propane inventories are 10.3 million barrels below levels a year earlier.

Rising international LPG prices may hurt demand in China, Asia's biggest importer behind Japan and South Korea.

China's import demand in the fourth quarter may remain low, predicted China Oil, Gas & Petrochemicals in a Nov. 1 report. High international prices and substitution with alternative energy such as natural gas may curb imports, said China OGP, which is published by the official Xinhua news agency.

"There is now increasing concern that importers, deterred by escalating prices, will keep purchases to a minimum," said Kevin Zhuang, director of the gas department at Guangdong Oil & Gas Association.

"We're seeing fewer deals for December- and January-arrival cargoes, which could squeeze supply during the Lunar New Year festival in February."

Importers in Guangdong province raised prices to 7,250 yuan (US$972) a ton on an ex-tank basis from about 6,930 yuan a week ago, Zhuang said. Refiners sell the product at 6,950 a ton, he said.

Guangdong province remains the biggest importer of LPG. The southern province bought 344,700 tons, or 74 percent of China's September imports of 468,500 tons, China OGP said.

The nation's imports in the first nine months of 2007 fell 20 percent to 3.2 million tons from a year earlier, China OGP said, citing the Beijing-based National Bureau of Statistics.

The benchmark freight rate for a 44,000-ton LPG carrier from Ras Tanura to Chiba in Japan has risen 28 percent in the two weeks ended Nov. 1. Rates increased to US$48.21 a ton Thursday, the highest since Sept. 21, according to London-based Baltic Exchange.

Prices of fuel oil, burnt to power ships, have jumped 27 percent since Oct. 1 to US$502.50 a ton Thursday, according to data compiled by Bloomberg.

"About 40 cents per ton of additional freight is required for each US$10 of fuel increase to maintain the same voyage result," shipbroker Fearnleys AS wrote in its Nov. 1 report.

PT Pertamina, Indonesia's state oil company, is seeking as much as 40,000 tons of LPG for Nov. 24-26 delivery to Tanjung Uban.