Oil climbs near $73 on higher demand

Crude demand rose for first time in 10 months, International Energy Agency says, reigniting hopes that decline has bottomed out.

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By Julianne Pepitone, CNNMoney.com contributing writer

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NEW YORK (CNNMoney.com) -- Oil jumped near $73 a barrel on Thursday after the International Energy Agency raised its estimate for 2009 oil demand for the first time in 10 months.

Light, sweet crude for July delivery jumped $1.35, or almost 1.9%, to settle at $72.68 a barrel Thursday.

That's the highest settle price since Oct. 20, when oil ended at $74.25 a barrel.

World oil demand will contract less than previously expected in 2009, the IEA said in its monthly Oil Market Report.

It's the IEA's first estimate increase since August 2008, adding to signs that the decline in demand may have already bottomed.

The IEA report said worldwide crude demand is expected to fall in 2009 by 2.47 million barrels per day, to 83.3 million. The agency's previous forecast was for a demand decline of 2.56 million barrels per day, the steepest drop since 1981, according to Reuters.

The agency warned its upwardly-revised estimate does not "necessarily imply the beginnings of a global economic recovery, and may only signal the bottoming out of the recession."

Still, the IEA report seemed to confirm Wednesday's weekly U.S. inventory report from the Energy Information Administration, which said crude stocks fell by 4.4 million barrels last week. Gasoline and distillates stockpiles also fell. Analysts had expected an increase in all three.

The currency market also boosted crude, as the dollar extended losses. Positive U.S. data on first-time jobless benefits and retail sales prompted a flight from the safe-haven greenback. The price of oil often falls when the dollar rises, because crude is priced in dollars around the world.

OPEC: The Organization of the Petroleum Exporting Countries -- whose members produce about 40% of the world's crude -- is due to release its own monthly oil report on Friday.

OPEC countries have said $75-$80 per barrel is a fair level for oil prices, according to Reuters, and member have promised to cut 4.2 million barrels a day of oil from September production levels. On Sunday, the Venezuelan oil minister said member countries were complying with 86% of promised cuts.

Gasoline: The national average price for a gallon of regular unleaded gasoline increased to $2.632, from the previous day's $2.627, according to a daily survey conducted for motorist group AAA.

Gas prices have increased daily since April 29. In those 44 days the average price of gas has jumped 58.4 cents, or 28.5%.  To top of page

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