Oil prices rise despite weak demand outlook

JEDDAH: Crude prices rose on Thursday, with Brent hitting six- month highs in part due to hopes of a Greek debt deal — helping to offset a slight cut in OPEC'S oil demand growth forecast.

New York's main contract, West Texas Intermediate ( WTI) light sweet crude for delivery in March, gained 60 cents to $ 99.31 a barrel.

Brent North Sea crude for March was up 38 cents to $ 117.58 around midday in London. Earlier on Thursday, the contract hit the highest level since August, at $ 118.17 a barrel.

Energy demand remains weak in the US. The world's biggest oil consumer used on average 18.1 million barrels per day in the past four weeks,

or 4.8 percent the year-ago level, official

data showed.

"Hopes of a new bail- out package for Greece, the weaker US dollar and the ongoing supply risks due to Iran, Sudan and Nigeria are giving buoyancy to oil prices," AFP quoted Commerzbank analyst Carsten Fritsch as saying.

" A d d i t i o n a l support is provided by the frosty conditions in Europe which weather experts predict will continue until the end of the month," he added.

Economic weakness in Europe and the United States and higher oil prices led OPEC on Thursday to cut its 2012 forecast for growth in global oil demand.

The Organization of Petroleum Exporting Countries (OPEC) now expects daily demand this year of 88.76 million barrels per day ( bpd), down from its forecast a month ago of 88.90 million bpd.

Energy demand remains weak in the US. The world's biggest oil consumer used on average 18.1 million barrels per day in the past four weeks, or 4.8 percent the year-ago level, official data showed on Wednesday.

The new forecast also represents an increase of 0.94 million bpd from the level seen in 2011, according to revised OPEC data.

"Waning OECD economies are negatively affecting the oil market and imposing a considerable range of uncertainty over the short term," the report said in reference to the Organisation for Economic Cooperation and Development.

It pointed in particular to concern over US growth prospects and potential fallout from the eurozone debt crisis.

In Europe, "the severity of the situation has lessened, but many challenges remain," OPEC noted.

OPEC'S 12 members account for about 30 percent of global crude oil output and they expected demand to increase mainly in China, India, the Middle East and Latin America.

Another factor that could curb demand worldwide however was higher oil prices.

" Firming retail petroleum prices are expected to have a negative impact on oil demand across the globe," OPEC said.

" The transportation and industrial sectors are the ones most affected. The use of oil in both sectors is slowing noticeably worldwide," it added.

The price for a basket of benchmark crude oils used by OPEC reached 111.76 dollars a barrel in January, the highest monthly average since April.