Crude continues to climb as Opec appeals for calm

New York: Oil prices resumed their upward trek on Tuesday, rising sharply as investors focused once again on growing demand for crude.

Light, sweet crude for July delivery rose $2.26 to $136.61 a barrel on the New York Mercantile Exchange while, in London, July Brent crude rose $2.22 to $136.13 on the ICE Futures exchange.

The catalyst for oil's latest advance was an International Energy Agency report that said global demand will continue to rise, especially in China. Demand for fuel for reconstruction work in the aftermath of May's earthquake will boost Chinese oil demand by 5.5 per cent this year, the IEA said, a slightly higher forecast than in previous reports.

"A 5.5 per cent increase in one of the largest consumers of oil in the world is a lot of barrels of oil," said Jim Ritterbusch, president of consultancy Ritterbusch and Associates in Illinois.

The Paris-based IEA said global demand for petro-leum products such as gasoline, diesel and heating oil will grow by 0.9 per cent, or 800,000 barrels a day, in 2008. That's down from the 1.2 per cent, or 1 million barrels, the IEA forecast earlier this year, but investors had expected even more evidence that high prices are cutting consumption, said Phil Flynn, an analyst at Alaron Trading in Chicago.

"I think the market was looking for a bigger amount of demand destruction in that report," Flynn said.

Meanwhile in London Opec's secretary general appealed for calm, saying the record-high crude oil price was unbearable and did not reflect any shortage of supply in the market.

Speculation

Abdullah Al Badri also called for measures to curb market speculation, a factor Opec says is sending prices to unjustified levels. "I ask through you, through Reuters, really we need some calm. We are panicking too much," Badri told the Reuters Global Energy Summit. "The situation is unbearable as far as we are concerned. I want to say, there is no shortage now and in the future."