Oil Gained Over A Dollar

Oil prices climbed over $1 on Thursday as the International Energy Agency warned that unforeseen high oil demand and disappointing world production growth could put world supplies under strain.

US light crude jumped $1.39, or 2.8 per cent, to $46.85 a barrel on the NYMEX, while London Brent crude was up $1.25 at $44.38.

Prices rose after the International Energy Agency, which advises industrialized nations on energy policy, cut its forecast for non-Opec oil supply growth this year, revised up estimates of demand and showed a sharp fall in stocks.

Industry stockpiles of crude oil, gasoline and other oil products held by OECD members fell by 85 million barrels in December, to 2.577 billion, or about 51 days? demand, the IEA said. OPEC has said it would look to cut supplies if stockpiles rose to near 60 days of future demand.

The impact of lower-than-expected supplies is magnified by continued growth in consumption, which last year grew at the fastest pace in a generation to fuel a 34 per cent price rally.

The IEA raised its forecast for world oil consumption this year by 80,000 bpd to 1.52 million bpd, though it warned that higher oil prices could ultimately hurt economic growth.