Oil rose 1.8 per cent to above $95 a barrel today as the dollar slipped and cold weather headed toward the US northeast, increasing demand in its massive heating oil market.
Short covering ahead of the expiration of December US crude futures also helped push prices higher, with oil settling up $1.67 at $95.10 a barrel. London Brent crude for January rose $1.39 to $91.62 a barrel.
Oil has slipped from an all-time high of $98.62 a barrel struck last week on the back of winter supply concerns, the falling dollar and rising speculator investment.
The dollar broadly fell on reports showing the biggest drop in US industrial production since January and poor foreign investment in US assets in September.
Prices fell yesterday after US government data showed a surprise 2.8 million build in crude inventories last week, easing supply concerns in the world's top consumer.
Demand for heating oil in the US northeast is expected to rise as temperatures fall below normal, forecaster Meteorlogix said.
Despite concerns from consumer nations hit with rising oil costs, producer group Opec will not discuss output levels at a summit meeting this weekend.
Officials said it will be on the agenda at the cartel's next meeting on December 5th in Abu Dhabi. Iran's oil minister said it was too early to say what action Opec might take then.
Opec has lowered its world oil demand growth forecast for the fourth quarter, partly due to the US economic problems and just days after the International Energy Agency slashed its own demand outlook.