Oil rises above $70 as IEA boosts demand outlook

SINGAPORE (AP) - Oil prices rose above $70 a barrel Thursday in Asia as the International Energy Agency boosted its global crude demand forecast.

Benchmark crude for September delivery was up 48 cents to $70.64 a barrel by midday in Singapore in electronic trading on the New York Mercantile Exchange. On Tuesday, the contract climbed 71 cents to settle at $70.16.

The IEA, based in Paris, said Wednesday it raised its global oil consumption forecast for this year and next. Despite the rosier outlook, the IEA still expects demand this year to fall 2.7 percent as economies struggle to emerge from recession.

"We're forecasting an upswing in global oil demand from the second quarter into the fourth quarter," Barclays Capital said in a report. "The grounds are being laid for a sustained push to the upside."

Barclays expects oil to average $71 a barrel in the third quarter and $76 in the fourth.

Investors brushed off evidence that suggested crude demand remains weak in the U.S. The Energy Department's Energy Information Administration said crude inventories rose last week by 2.5 million barrels and were up 7.5 million during the last four weeks.

Oil traders have also been watching global stock markets for signs of improving investor sentiment. The Dow Jones industrial average rose 1.3 percent Wednesday, and most Asian indexes gained in early trading Thursday.

"It might just be hard to break away from the major trend where equities go up and oil follows," said Michael Sander of Sander Capital Advisors in Seattle. "I would bet more on oil going up than down at this point."

In other Nymex trading, gasoline for September delivery rose 0.78 cent to $2.03 a gallon and heating oil gained 2.19 cents to $1.91. Natural gas for September delivery jumped 1.6 cents to $3.50

per 1,000 cubic feet.

In London, Brent prices rose 43 cents to $73.32 a barrel on the ICE Futures exchange.