Oil, gasoline rise on IEA forecast

Oil climbed back above $62 yesterday after the International Energy Agency said it saw no lasting damage to demand that has pushed producers and refiners to the limit and could lead to fuel shortages this winter.

There have been signs recently that persistent high prices are taking their toll on the economies of the world's big consumers. Hurricanes that battered US Gulf rigs and refiners catapulted oil to new record highs, finally crimping fuel use.

But the IEA, adviser to 26 industrialised nations, forecast demand growth would quicken to 1.75 million barrels per day next year "due to a rebound from the largely temporary impact of hurricanes Katrina and Rita and a recovery in Chinese demand".

Winter fuel supplies should be ample provided refiners avoiding unplanned shutdowns, postponed maintenance and kept working flat out, the IEA said. Some analysts were pessimistic.

"The chance of all that being met the entire winter is zero," said Deborah White, senior energy analyst at SG Commodities in Paris.

US crude oil futures were 87 cents higher at $62.67 a barrel by 0655 EDT, off Monday's 10-week low of $60.35. London Brent crude was up 72 cents at $59.50 a barrel.

Prices may have fallen a long way from late August's $70.85 record high, but they are still at levels unseen in real terms in a quarter of a century and are up 42 per cent since January 1.

The world's oil producers have been pumping flat out to supply refiners that are running at full tilt to produce fuel, gasoline and heating oil for the United States, India and China. Preliminary figures from China yesterday suggested oil imports were back on a growth track. September crude imports rose 4.8 per cent year-on-year after falling in August.

In another sign that softer demand may be a temporary phenomenon, Western European car registrations hit a record for September.

Gasoline stocks in the world's biggest consumer, the United States, are expected to show a week-on-week fall of 1.5 million barrels in data tomorrow, a Reuters survey found.

Distillate stocks, including heating oil, are expected to have dropped for the third straight week of winter.

Traders are watching how quickly hurricane-battered US crude and refinery production, as well as strike-hit French plants, will recover to increase fuel supplies.

About 2.1 million barrels per day (bpd) in US oil refining capacity remain offline due to hurricanes Katrina and Rita, the US Energy Information Administration said in its latest assessment of the hurricanes' impact on the US energy sector.

"Increasing concerns over supply shortages in the US because of the outages at refineries in the Gulf Coast and disruptions to refinery operations in France are giving support to the market," said Tony Nunan at Mitsubishi Corp. in Tokyo.

Workers at the largest refinery in France, a major fuel supplier to the US and Europe, have extended a strike until today. But a port blockade at the 600,000-bpd Fos-Lavera southern refining centre is expected to ease after workers agreed to resume operations on Monday.