Oil tops $74 and hits a 7-week high
Crude exporting countries say they expect stronger demand next year as the economy recovers. A weaker dollar also helps support prices.
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NEW YORK (Reuters) -- Crude oil rose to a seven-week high above $74 a barrel Tuesday after OPEC raised its 2010 demand forecast and the dollar weakened, boosting demand for commodities.
The Organization of the Petroleum Exporting Countries forecast a recovering world economy would boost world crude demand by 700,000 barrels per day next year, to 84.93 million bpd.
In its monthly outlook, OPEC raised its 2010 global demand forecast by 200,000 barrels a day, after the U.S. Energy Information Administration and the Paris-based International Energy Agency each raised their 2010 demand forecasts last week.
"The world economy now appears to be entering into a new phase, moving from a period of containing the crisis to one of economic recovery," the group said in its monthly market report.
U.S. crude rose 88 cents, or 1.2%, and settled at $74.15, having earlier reached a seven-week high of $74.47 a barrel. Oil prices have surged by 65% this year.
The U.S. dollar touched a 14-month low against a basket of other currencies, which also helped gold rally to a fresh record high. Dollar-priced commodities such as oil and gold tend to rise when the greenback falls as they become cheaper for holders of other currencies.
In its fourth consecutive day of gains, oil failed to break a year-high of $75 a barrel, as investors remained wary of the pace of a U.S. economic rebound.
U.S. equities mostly fell after an economic bellwether, consumer goods giant Johnson & Johnson (JNJ, Fortune 500), reported disappointing quarterly sales figures early Tuesday.
The S&P 500 index slid for the first time in seven days.
Earnings are due from a number of major U.S. firms this week, and the oil market is tracking corporate results closely for signs of broad economic recovery.
"The weak dollar is a reason we're in positive territory today," said Tim Evans, analyst at Citi Futures Perspective in New York. "The crude oil market has also become obsessed with the S&P (stock) index."
Cold weather in the United States also helped boost oil prices, with the National Weather Service forecasting the first seasonal wave of cold weather in the Northeast and Midwest would boost demand for heating oil to 43% above normal levels.
U.S. weekly oil inventory data from the American Petroleum Institute (API) will be delayed until Wednesday due to Monday's Columbus Day holiday, while the Energy Information Administration (EIA) report will be released Thursday.
A Reuters poll of analysts forecast the data will show a 700,000-barrel build in crude stocks last week, after a surprise drawdown last week. 
