Oil prices rise as OPEC sees demand rebound
LONDON: Oil prices climbed slightly on Tuesday, nearing 74 dollars in London, as OPEC stuck to its forecast of a rebound for energy demand next year.
Brent North Sea crude for delivery in September rose 11 cents to 73.61 dollars a barrel in London long before the close.
New York's main contract, light sweet crude for September, gained 12 cents to 70.72 dollars a barrel.
World oil demand will decline slightly in 2009 but start growing again next year, the OPEC oil producers' cartel said on Tuesday in its monthly report, standing by its previous forecast.
"The forecast for world oil demand growth in 2009 remains unchanged, showing a decline of 1.6 million barrels per day (bpd)," or 1.93 percent to 83.91 million bpd, the Organization of Petroleum Exporting Countries said.
In 2010, the trend was expected to reverse, with demand growing by 0.5 million bpd, or 0.59 percent, as already predicted in OPEC's July report.
"Upbeat sentiment and hopes of a forthcoming economic recovery continue to underpin the market (oil prices) despite fairly sluggish fundamentals (of supply and demand)," Andrey Kryuchenkov, commodities analyst at VTB Capital, said on Tuesday.
Oil prices rose to historic high points of more than 147 dollars a barrel in July last year. But they went on to plummet to near 30 dollars in December after a financial and economic crisis in the United States escalated to affect other economies around the world and hit oil demand.
Prices have since clawed back, driven in part by hopes of an early rebound for the global economy. But while there are signs that the global recession is abating, energy demand has remained soft, analysts said.
"While the economic outlook is starting to firm up, there must be confirmation that inventories are being drawn down for oil prices to rise," said Adam Sieminski of Deutsche Bank.
"The data so far has not been clear about what's going on."
Data released last week by the US Department of Energy (DoE) painted a mixed picture of oil demand in the United States, the world's biggest energy user.
The widely monitored DoE report said US crude oil stockpiles soared by 1.7 million barrels in the week ending July 31, three times more than the average analyst projection.
Inventories of distillates, which include diesel and heating fuel, sank by 1.1 million barrels, instead of the 900,000-barrel increase expected.
Gasoline reserves fell by 200,000 million barrels, far less than the drop of 1.3 million barrels anticipated.