OIL prices fell further from record highs yesterday on a brighter outlook for the production of crude in Iraq.

A barrel of oil cost $45.76 in New York as traders welcomed the first exports from Iraq's northern terminal at Kirkuk since May.

This was lower than the peak of $49.40 last week - a level that analysts said would dent the prospects of global economic growth if it was sustained.

Positive sentiment continued to benefit shares in blue-chip companies in London, with the FTSE 100 Index closing in positive territory for the second day in succession.

But analysts warned that many of the reasons behind the surge in oil prices this month had not changed, and markets remained vulnerable to further shocks in Iraq.

There also remained a possibility of lower output in Russia, where authorities are in dispute with the country's largest oil company, Yukos.

Kevin Norrish, of Barclays Capital, estimated that demand in the final three months of this year would be two million barrels higher than at present.

This would put added strain on oil-producing nations that are already overstretched.

Mr Norrish said: "The fundamentals are still in place for $50 a barrel. We are getting a temporary reprieve based on technical factors and the situation in Iraq."

Those technical factors include a change in the date of delivery of crude, which wiped at least $1 from the oil price as traders bought barrels for October.