Oil prices surged above 66 usd a barrel in Asian trade as the market awaited the weekly petroleum inventory report from the US amid continued strong global energy demand, dealers said. At 12.45 pm (0445 GMT), New York's main contract, light sweet crude for delivery in October, was trading at 66.22 usd a barrel, up 51 cents from its close of 65.71 usd in the US overnight. The US Department of Energy is expected to release the weekly inventory report later today with the market expecting a rise in crude stocks. But geopolitical events such as developments in Iraq continue to keep the market on edge because of possible disruptions to already tight supplies amid robust demand, dealers said. Iraq has resumed oil exports from its southern fields after a 16-hour suspension due to a power outage, which may have been caused by sabotage. Oil exports from the fields had stopped from midnight Sunday. The southern fields are currently the most productive in Iraq. Northern oil pipelines run through the restive Sunni heartland north of Baghdad, making them a target for insurgent attacks. Dave Ernsberger, Asia oil director at energy information giant Platts in Singapore, said strong energy demand is partly being fuelled by several Asian governments continuing to subsidise oil prices. "One of the key drivers of demand is that oil prices for Asian consumers tend to to be artificially low," he said, referring to government oil subsidies in countries like China and Indonesia. Unless political leaders take drastic steps to remove subsidies, demand is unlikely to decline. Traders on the other hand are trying to push prices higher in the hope they would reach a point where demand would cool down, Ernsberger said. "There's really been a major push upwards from traders in the market who appear bent upon finding the price level where they can destroy demand," he said. "I think we're close to that level now... In my personal opinion 70 usd is that level." Phil Flynn, a trader with US-based Alaron Trading Corp, said competition for energy sources was played out in the recent bidding war between China and India over oil firm Petrokazakhstan. China outbid India, offering 4.18 bln usd. "This move by China underscores their desperation to secure oil as they import 75 pct of their oil. India is not far behind and they currently import 70 pct of what they need," Flynn said.