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.