Oil Prices Increase on ’05 Use Estimate

Crude oil futures prices climbed above $54 a barrel Friday after the International Energy Agency estimated that global petroleum demand would grow faster than previously expected in 2005.

Light crude for April delivery rose 89 cents to $54.43 on the New York Mercantile Exchange, and April gasoline futures rose 3.44 cents to $1.518 a gallon. A day earlier, energy futures retreated sharply in what analysts described as profit taking after the market tested the October peak above $55 a barrel Wednesday but couldn’t surpass it.

“We are going to see some jagged action the next few weeks,” said Ng Weng Hoong, oil editorial manager at energy news website EnergyAsia.

The Paris-based International Energy Agency said Friday that it expected world oil demand growth of 1.81 million barrels a day, bringing its forecast for average daily demand to 84.3 million barrels. In raising its demand forecast by 330,000 barrels a day from earlier estimates, the energy watchdog cited a cold snap in February and March in the U.S. and Europe, a better outlook for the U.S. economy and higher demand from China.

Analysts said worries over Wednesday’s meeting of the Organization of the Petroleum Exporting Countries in Iran were easing as oil ministers assured traders in recent weeks that they would keep production at present levels.

Moreover, the latest U.S. government petroleum supply report showed growth in crude oil inventories to about 9% above year-earlier levels and only modest declines in supplies of gasoline and distillate fuel. Still, analysts said crude prices remained generally strong on a weak U.S. dollar and increasing global demand.