Oil supported by IEA forecasts

Oil supported by IEA forecasts

Agence France-Presse, London

World oil prices rose on Wednesday, finding further support in
demand forecasts from the International Energy Agency, alongside
keen Chinese demand, analysts said.

New York's main contract, light sweet crude for delivery in
November, rose 37 U.S. cents to US$63.90 per barrel in electronic
trading, after gaining $1.73 on Tuesday.

In London on Wednesday, the price of Brent North Sea crude for
November delivery advanced 38 U.S. cents to $60.46 per barrel.

"Crude futures rose after the IEA forecast strong global oil
demand for next year, as the US recovers from recent hurricanes
and Chinese demand revives," Sucden analyst Sam Tilley said.

Market sentiment remained positive on prices after the IEA had
reduced on Tuesday its forecast for growth of global oil demand
this year by a lower-than-expected 90,000 barrels per day (bpd)
to 1.26 million bpd, dealers said.

"This was backed up by news that, according to government
data, crude imports into China rose 4.8 percent year-on-year in
September, after falling in August, despite the high cost of oil
at present," Tilley said.

The upward trend in prices "goes against the idea of demand
destruction caused by the high prices, as China's economy
continues to grow", he added.

Demand destruction gained currency this month as oil prices
plunged by more than 11 percent, since smashing record levels
above $70 per barrel in the wake of Hurricane Katrina in August.

Global oil demand in 2006 was forecast to grow by 1.75 million
bpd, the IEA said Tuesday, owing to a rebound from "the largely
temporary impact of (hurricanes) Katrina and Rita and a recovery
in Chinese demand".

Hurricane damage closed off 1.2 million barrels per day of oil
production in the U.S. Gulf region in September, the IEA said,
adding that the natural disasters had a "substantial" effect on
reducing demand.

Crude futures notched up historic records in August, striking
$70.85 in New York and $68.89 in London, on supply concerns as
Katrina tore through the U.S. Gulf Coast, ravaging U.S. energy
production.

Almost 71 percent of Gulf crude production remained offline on
Tuesday because of hurricane damage, while seven U.S. refineries
remain shut down.