Some major investment banks are still betting that oil prices will grow next year despite an emergency injection of crude on world markets from the U.S. and other countries.
Higher oil prices should push gasoline prices up as well.
Benchmark crude rose as high as $97.48 per barrel Tuesday after Barclays Capital raised its price forecast for 2012. And Goldman Sachs said the International Energy Agency's decision at the end of June to release 60 million barrels of oil from its reserves won't cool off prices as much as originally thought.
Independent oil analysts say prices still could head lower this year. But some think IEA's announcement speaks volumes about its expectations for world oil supplies.
"I think it's an admission from them that Saudi Arabia might not be able to produce enough oil on its own" to meet increased world demand, analyst Stephen Schork said.
Benchmark West Texas Intermediate crude on Tuesday was up $1.82 at $96.76 per barrel in afternoon trading on the New York Mercantile Exchange. In London Brent crude, which is used to price many international oil varieties, added $2.48 at $113.92 per barrel on the ICE Futures exchange.
Barclays increased its 2012 forecast for Brent crude by $10 to $115 per barrel on Tuesday, saying prices will rise as global oil demand increases. Barclays sees China, India, Saudi Arabia and Brazil as the main sources for demand growth.
Goldman Sachs also pointed out late last week that IEA will actually release only about two-thirds of what was originally promised. Goldman analyst David Greely said about one-third of the 60 million barrels will come from limiting the amount that countries are required to keep in emergency supplies. Since the oil industry tends to keep much more on hand than what's required, Greely said that the new limits will have an "almost negligible impact on oil prices."
Greely said prices probably won't fall as much as he'd expected following the IEA announcement. He revised his "near-term" Brent crude price forecast from $117 to $109-111 per barrel, and his 2012 Brent forecast from $130 to $125-$127 per barrel.
Also on Tuesday the government said factory orders rose, as businesses ordered more airplanes, autos, and oil drilling equipment in May. The Commerce Department report suggested that supply disruptions from Japan's earthquake and tsunami in March are easing.
Meanwhile, U.S. gasoline pump prices hit $3.562 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular has dropped 42.3 cents from three-year highs set in early May, but it's still 83.8 cents higher than the same time last year.
In other Nymex trading for August contracts, heating oil rose 4 cents to $2.9688 per gallon and gasoline futures gained 2 cents at $2.9904 per gallon. Natural gas picked up 4 cents at $4.374 per 1,000 cubic feet.
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