Reply #87: UPDATE 7-Oil rises over $58, IEA sees tighter market

[Ghost Dog]

http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=d4570763-ade7-468a-b2d7-a27422826f3f

LONDON, Feb 13 (Reuters) - Oil climbed above $58 a barrel on Tuesday as the International Energy Agency boosted its 2007 demand forecast and said it saw tightening market fundamentals.

U.S. crude <CLc1> was up 65 cents at $58.46 a barrel at 1728 GMT, after dropping $2.08 or nearly 3.5 percent on Monday on signs that OPEC will refrain from further supply cuts when it meets in March.

London Brent crude <LCOc1> 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.

"Upward demand revisions, a now-weaker non-OPEC growth trend and declining Iraqi production all point to markedly tighter global balances," said the IEA, which advises 26 industrialised nations.

Non-OPEC output growth continued to miss forecasts as new projects were delayed, while Iraq's dilapidated oil sector struggled to maintain output.

The IEA noted that supply curbs from the Organization of Petroleum Exporting Countries 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.

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