Oil moved higher today, rebounding from heavy losses last week on concerns over tight supplies ahead of winter and after the International Energy Agency (IEA) forecast faster demand growth next year.
US crude oil futures edged up 17 cents to $63.70 a barrel, adding to the previous day's 2.8 percent rally from a 10-week low of $60.35 on Monday.
Oil had slid from an Aug. 30 peak of $70.85 after an emergency oil stocks release by the IEA and on worries over weaker demand, after signs that high oil prices were taking a toll on major consumers.
The IEA, an adviser to 26 industrialised nations, trimmed its forecast for 2005's demand growth to 1.26 million barrels per day (bpd) after hurricanes knocked out US rigs and sent fuel prices to record peaks.
But it said demand growth would rebound to 1.75 million bpd next year after the largely temporary impact of hurricanes Katrina and Rita and on a recovery in Chinese demand. Analysts said if demand in the world's largest consumer remained healthy into the fourth-quarter, concerns over US winter fuel supplies would become the focus of the market.
"Natural gas production in the US is still not back up to 100 per cent, and gas is the most commonly used heating fuel in the US," said Gerard Burg, minerals and energy economist for the National Australia Bank.
"We should see pressure to shift to heating oil if natural gas supply can't meet demand, and the shift to distillates will push prices up further.