Oil above $97 as OPEC raises demand forecast

The price of oil inched further above $97 a barrel Tuesday, adding to a sharp rise the day before, as OPEC upgraded its forecast for global demand this year.

By early afternoon in Europe, benchmark oil for March delivery was up 28 cents to $97.31 in electronic trading on the New York Mercantile Exchange. The contract on Monday gained $1.31 to finish at $97.03 a barrel on the Nymex as the euro strengthened against the dollar.

OPEC, the Vienna-based organization comprising many of the world's key oil exporters, raised its 2013 forecast for global demand to 89.7 million barrels — 80,000 barrels more than its previous forecast a month ago — citing "some signs of recovery in the global economy and colder weather at the start of this year."

It said about half of the demand increase over 2012 would come from China.

Oil prices were also supported by a rise in the euro against the dollar. The increase makes it cheaper for European traders to buy crude oil, which is priced in dollars. On Tuesday, the euro was up to $1.3443 from $1.3398 late Monday in New York.

Meanwhile, investors kept an eye on North Korea, which ran its third nuclear test since 2006, an underground explosion which set off powerful seismic waves.

"While North Korea is a negligible oil consumer, the move nevertheless could be seen as contributing to geopolitical instability in the world's pre-eminent demand growth region," said a report from JBC Energy in Vienna.

Investors will also be monitoring fresh information on U.S. stockpiles of crude and refined products.

Data for the week ending Feb. 8 is expected to show a build of 2.5 million barrels in crude oil stocks, while gasoline stocks are seen remaining unchanged, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.

The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration — the market benchmark — will be out on Wednesday.

In London, Brent crude, used to price international varieties of oil, was up 47 cents to $118.60 a barrel on the ICE Futures exchange.

In other energy futures trading on the Nymex:

— Wholesale gasoline rose 1.6 cents to $3.0372 a gallon.

— Natural gas added 2.6 cents to $3.305 per 1,000 cubic feet.

— Heating oil gained 0.71 cent to $3.2386 a gallon.

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Pamela Sampson in Bangkok contributed to this report.