Oil climbed above $58 a barrel this evening as the International Energy Agency boosted its 2007 demand forecast and said it saw tightening market fundamentals.
US crude was up 65 cents at $58.46 a barrel, after dropping $2.08 or nearly 3.5% yesterday on signs that OPEC will refrain from further supply cuts when it meets in March. London Brent crude rose 29 cents to $56.89 a barrel.
Robust economic expansion in the world's second largest consumer, China, prompted the IEA to raise its 2007 oil demand growth forecast.
Global demand will grow 1.55 million barrels per day (bpd) this year, up from a forecast of 1.39 million bpd a month ago, the IEA said in its monthly Oil Market Report.
The IEA noted that supply curbs from the Organisation of Petroleum Exporting Countries (OPEC) had helped to drain stockpiles in major consuming countries of 40.2 million barrels in December and that downward trend continued in January.
The agency said that any further OPEC cut beyond its existing reduction of 1.7 million barrels per day might be a step too far in the group's efforts to balance supply and demand.
