Oil prices rise after IEA report, inventory data
LONDON: Oil prices rose on Wednesday as traders digested data reflecting soft energy demand and as they awaited the Federal Reserve's latest monetary policy decisions.
Brent North Sea crude for delivery in September climbed 74 cents to 73.19 dollars a barrel in London afternoon trade.
New York's main contract, light sweet crude for September, gained 1.01 dollars to reach 70.52 dollars a barrel.
The market was awaiting the outcome of the US Federal Reserve's latest monetary policy meeting due later Wednesday.
Analysts expect the Fed to maintain rates at virtually zero percent and comment on its unprecedented efforts to pump prime the economy.
"Markets will continue to watch the economic data for some hoped-for demand growth, and the (Fed) announcements Wednesday evening will provide the next major input," said Sucden anlayst Brenda Sullivan.
Oil demand is lagging behind inconclusive signs of global recovery from the economic crisis, the International Energy Agency said on Wednesday in a cool assessment of so-called "green shoots" of economic growth.
Demand this year would be far weaker than last year, and an unexpectedly weak rally next year would fall far short of compensating for this, said the IEA.
The IEA also revised upwards expected global demand growth for oil this year by 190,000 barrels per day, and for next year by 70,000 barrels, because the outlook for Asian demand had risen for both years.
"This barely dents the sharp demand contraction to 83.94 mbd expected this year, while growth in 2010 is slightly lower than previously estimated, at plus 1.6 percent or 1.3 mbd to 85.25 mbd," the report said.
The broad findings of the IEA report chimed with the overall assessment of the Organization of Petroleum Exporting Countries which reported Tuesday that world oil demand would decline slightly this year but begin to grow in 2010.
The IEA also said that the US driving season, a big factor in demand for petrol at this time of year, had "fizzled out," US industrial activity was still falling and global use of diesel fuel, which is used for trucks, transportation, and in generators, remained weak.
Separately on Wednesday, the US Department of Energy said crude inventories had jumped by 2.5 million barrels last week, three times the amount expected by analysts.