Oil rebounds, stays above $84

Oil prices rebounded in Asian trade Wednesday as the market reacted to forecasts of stronger energy demand by the International Energy Agency (IEA).

New York's main contract, light sweet crude for delivery in May, climbed 34 cents to $84.39 a barrel. Brent North Sea crude for May also was up 18 cents to $84.90.

"There's no doubt that the market is reacting to the IEA numbers especially in the OECD countries  where demand growth has been weaker," said Ben Westmore, a minerals and energy economist with the National Australia Bank in Melbourne.

But the gains could be capped by the US Department of Energy's weekly energy reserves report, a closely-watched indicator of demand in the world's biggest economy, due late Wednesday, Westmore said.

"It looks like most analysts are expecting another build in US crude stocks and it does seem like demand has not really rebounded to the extent that supply has and that's going to weigh on prices at this level," he told AFP by telephone.

The IEA, which offers advice on energy policy to the Organisation for Economic Cooperation and Development (OECD), on Tuesday upgraded its forecast for global energy demand in 2010 by 30,000 barrels per day.

It cited strong economic activity in the United States, Asia and the Middle East for its new projections.    

However, the IEA also warned that oil prices above $80 a barrel could hamper recovery from the latest global economic downturn.

"While ongoing price subsidies may shield non-OECD consumers from the reality of any potential renewed surge in prices, this, plus tighter credit than two years ago, could stall OECD economic recovery or render it more 'oil-less' than we currently envisage," the IEA said.