Oil prices dipped on Monday as investors took profit after U.S. crude prices leapt more than $2 to their second-highest close on record, fuelled by upbeat signals on the U.S. economy and nagging supply worries.

U.S. crude for September delivery fell 32 cents to $76.70 a barrel in Globex electronic trading by 0130 GMT, trimming just a whisker of Friday's $2.07 or 2.76 percent surge that took oil to just one cent shy of its record-high settlement price of $77.03, marked on July 14, 2006.

London's Brent crude, which lagged the U.S. market with a gain of $1.08 on Friday, fell 44 cents to $75.82 after reverting last week to trade below U.S. crude, on signs of lower crude stocks in Oklahoma and recovering North Sea oil production.

Prices were pushed sharply higher on Friday and what we're seeing this morning is investors cashing in on their profits, said David Moore, an oil and gas analyst at the Commonwealth Bank of Australia.

Moore said he expected oil prices to continue trading at fairly robust levels through the week as supply concerns persist, possibly extending the market's $9 gains triggered by a flurry of fund buying in late June and early July.

OPEC's second-largest producer Iran said on Sunday it did not expect OPEC to discuss changing output levels at its next scheduled meeting in Vienna in September, despite urgings to lift output now to avoid a sharp fall in stocks ahead of winter.

I do not imagine that, at its next regular annual meeting, OPEC would put the issue of changing its output level on the agenda, Oil Minister Kazem Vaziri-Hamaneh was quoted as saying on the Iranian oil ministry Web site.

Government inventory data last week showed a third straight decline in U.S. crude stocks, and analysts said OPEC's curbs would ensure a continuing decline through the third quarter.

UPSIDE RISKS

There are substantial upside risks to prices this winter if OPEC does not expand output, Merrill Lynch energy analyst Francisco Blanch said in a report.

Should the weather turn unseasonably cold in November or December, we believe oil prices could spike well above $80.

The burden on OPEC to meet demand is greater than expected at the start of this year due to lagging non-cartel output.

A Reuters poll on Friday showed analysts slashing their non-OPEC oil supply growth estimates for 2007 by more than half due to faster-than-expected declines from producers such as Norway and Mexico, heightening worries of a supply crunch in the fourth quarter during peak winter demand.

Friday's gains were aided by robust U.S. economic data showing gross domestic product rose at a 3.4 percent annual rate, the fastest since 4.8 percent in the first quarter of 2006, the Commerce Department said on Friday.

That news helped oil shake off some of the anxiety brought on by a two-day rout in global equity markets, triggered in part by the deteriorating U.S. housing market.

Further support will come from more U.S. refinery outages, including the closure of a gasoline-making catalytic cracker at ConocoPhillips' Linden, New Jersey, refinery and maintenance at Total's 232,000 bpd Port Arthur, Texas, plan through August 6.

OPEC Merrill Lynch