LONDON (AFP) - Oil prices resumed their upwards march after falling for two days as traders braced for a drop in heating oil stocks ahead of the peak demand season during the northern hemisphere winter.
The price of reference light sweet crude for delivery in November climbed by 36 cents to 53.65 dollars a barrel in electronic trading on the New York Mercantile Exchange.
US crude oil futures have fallen sharply from an all-time high 55.33 dollars set in electronic deals on Monday, as investors locked away profits from a record-setting run.
In London Brent North Sea crude oil for December delivery increased by 43 cents to 49.20 dollars in early deals.
"Prices are picking up ahead of the stats on US stocks," said GNI-Man Financial trader Kevin Blemkin, referring to weekly oil inventory estimates from the Department of Energy and the private American Petroleum Institute.
"There are concerns about the distillate figure as the market is anticipating that there is going to be another draw.
"That is why we are seeing a push up. The market is worried about the winter availability. Plus we've got the ongoing problems within the industry," he said.
While stocks of US gasoline have recovered, inventories of distillates -- mostly diesel and heating oil -- have dropped heavily in recent weeks following supply problems in the Gulf of Mexico caused by Hurricane Ivan.
The figures were expected to show a rise of about two million barrels in crude stockpiles, but a fall in distillates of roughly one million barrels, said Blemkin.
Prices are also being supported by reports from US weather agencies predicting a much colder than previously expected winter season, at a time when heating oil stocks are already low.
Crude oil prices could hit 60 dollars a barrel on the back of speculative buying but will then slide back to 45 dollars by the year-end, the chief of the Japanese refineries' group said.
"Rising oil prices are speculative and could hit 60 dollars briefly," Fumiaki Watari, the chairman of the Petroleum Association of Japan, told a news conference in Tokyo.
"I expect they will fall back to 45 dollars a barrel by the end of the year," said Watari, who is also president of Nippon Oil Corp, the largest oil refiner in Japan.
Prices fell heavily on Monday and Tuesday as traders banked profits and fretted over signs that soaring prices could cool red-hot demand.
The Organization of Petroleum Exporting Countries on Monday pared down its growth projection for 2005 oil demand by 130,000 barrels a day (bpd) to 1.61 million bpd as high prices deter consumption.
And the Paris-based International Energy Agency forecast last week that global oil demand growth would slow sharply next year to 1.45 million bpd, or 1.8 percent, from 2.71 million, or 3.4 percent, this year.