Oil prices rose and shares in BP fell after an explosion killed at least 14 people and injured more than 70 at a major oil plant in Texas.

Reports said FBI and Department of Homeland Security investigators were at the scene of the explosion at the Texas City Refinery, but that terrorist activity was not thought responsible.

Don Parus, BP's Texas City manager said: "There are still some people who are not accounted for. We have a process to account for everyone working in the plant at the time of the incident and we are proceeding with that process."

Jittery oil traders, weary of recent price spikes driven by supply concerns and soaring demand, bid the markets higher.

US light crude rose 32 cents to $54.13 a barrel, after sharp falls of more than 5 per cent in the two previous days trading. In London, Brent crude futures gained 30 cents to $53.34 a barrel.

Before news of the blast broke, oil prices had eased after the US Department of Energy announced stockpiles had risen sharply over the past week.

In New York, petrol futures surged to a record high of $1.608 a gallon before easing a shade.

In London, shares in BP fell 7p to 548.5p as investors sought out news on the explosion. The stock recovered during the day to close at 551p, down 4.5p on the day.

The Texas plant is the third largest in the United States and processes nearly half a million barrels of crude oil a day. It produces almost one third of BP’s US petrol output and 3 per cent of the country's overall gasoline supply.

According to BP, the explosion damaged a unit that upgrades the quality of gasoline, but did not affect other operations at the refinery.

Citigroup Smith Barney said: "While clearly bad news for the company, with 14 employees reported dead, the operational impact appears limited."

One trader said: "This will not affect the oil market fundamentals and, depending how the news unfolds, prices will probably ease back. The impact on gasoline prices seems likely to be greater."

Overstretched refinery plants, starved of investment in decades of relatively cheap oil, have been highlighted as a factor in the oil market's recent surge.

Soaring demand spurred by China, supply concerns in Russia, the Middle East and Africa, and the role of speculative traders have also driven up the cost of crude.

Analysts said the Texas explosion placed the ability of plants to meet demand in doubt - especially as the US driving season approaches and demand for petrol increases.

"The United States has been running refineries at record rates... and we’ve been very lucky we haven’t had a major problem like this earlier," Phil Flynn, an analyst at Alaron Trading in Chicago, told Reuters.

"It’s a reminder how vulnerable we are."

BP has operated the plant, first opened in 1934, since its 1999 acquisition of Amoco.

Lord Browne, BP’s chief executive, flew to Texas this morning to visit the site and meet with employees and local officials.

Opec hinted last week that it was prepared to raise its official output ceiling for a second time in quick succession if prices remained high.

But an initial 500,000 barrels per day raise to 27.5 million bpd did little to calm the markets and raised questions over the oil cartel's ability to lead prices lower.

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