Oil held firm above $61 on Wednesday, supported by icy weather in the United States and forecasts of strong growth in global demand. Activity was muted ahead of weekly US inventory data due later in the day and expected to show a draw on crude stocks but a rise in product supplies as refineries crank up runs and imports ebb.
US crude shed 7 cents to $61.30 a barrel, while London Brent crude was up 1 cent at $59.53.
Oil touched $61.90 on Tuesday, its highest since November 4, and the US cold snap helped natural gas prices soar to a record-high of $15.78 per million British thermal units. Natural gas was down 0.15 percent at $15.355 per Mt on Wednesday.
Cold weather last week boosted heating demand to about 30 percent above normal, the US National Weather Service said, and colder temperatures this week could keep demand unusually high. The US Northeast, the biggest heating oil market in the world, will be about 8-12 degrees Fahrenheit below normal over the coming two days, private forecaster Meteorlogix said on Tuesday.
The new cold spell could strain heating fuel inventories, which have remained relatively robust this year after a mild start to the northern-hemisphere winter. Traders will be scrutinising weekly government data due to gauge how well refiners have kept up supplies.
"It looks like the market just doesn't want to go down. I think everybody is going to be watching stocks today," said Tony Nunan of Mitsubishi Corp's risk management business.
Crude oil inventories are expected to have fallen by 900,000 barrels, while distillate stocks likely rose by a modest 200,000 barrels in the week to December 9, a Reuters survey showed. Gasoline stocks were seen rising by 1 million barrels.
"Last week's statistics did not reflect cold weather. If statistics show any signs of bullishness, prices will go higher. Technically, the market wants to test $65 a barrel," Nunan said.
Kerosene stockpiles in the world's third-largest oil consumer Japan, where the fuel is used in home heating, fell last week after a cold snap boosted demand, putting them 7 percent below last year's hefty levels, data showed.
Oil prices were also supported by Tuesday's report of the International Energy Agency (IEA), which forecast strong growth in world oil demand over the next five years despite high prices.
IEA, adviser to 26 industrialised nations, said oil demand growth would average 1.8 million to 2.0 million barrels per day (bpd) for each of the next five years, reflecting strong buying from China and India, compared with a 1.18 million bpd-rise this year.
Forecasts for a recovery in demand will be good news for the Organisation of Petroleum Exporting Countries, which agreed on Monday to pull output back to within an official 28 million bpd limit and said an offer to sell all its spare oil would lapse.
Opec has been pumping above the formal ceiling of 28 million bpd to help contain record oil prices this year that hit $70.85 on August 30. Prices are still up 41 percent since January. Opec, supplier of a third of the world's crude, also agreed to meet again in January, than expected, with a view to cutting output in spring when demand wanes.
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