Oil rises on cold U.S. weather forecasts

NEW YORK (Reuters) - Oil rose on Tuesday, adding to sharp gains made the previous session on expectations that a cold spell in the U.S. Northeast this weekend would boost demand in the world's biggest heating oil market.
U.S. crude settled 67 cents higher at $60.99 a barrel after hitting a two-week high of $61.20 in earlier activity, adding to gains of $1.08 on Monday. London Brent crude rose 77 cents to $61.21 a barrel.
Private forecaster AccuWeather said on Monday cold weather would sweep into the U.S. East Coast by the weekend, ending a stretch of above-normal temperatures that has curbed demand. NYMEX heating oil futures rose 1.4 percent on Tuesday.
Despite the rally, oil has been stuck in a two-month trading rut of $58-$62 a barrel, as bulging inventories in consumer nations knocked crude off a record high over $78 a barrel struck in mid-July.
The market is looking ahead to an
OPEC' name=c1> SEARCHNews News Photos Images Web' name=c3> OPEC meeting on December 14 that could result in a further output cut, after the cartel last month agreed to reduce production by 1.2 million barrels per day to help trim inventories.
Further direction is expected from the release of weekly U.S. government data on Wednesday. U.S. crude stocks fell 100,000 barrels last week, according to a Reuters poll of analysts ahead of the data, as refinery utilization rates were forecast to rise by 0.8 percentage points.
Distillate stocks were expected to increase by 400,000 barrels and gasoline stocks by 500,000 barrels, according to the poll.
"The price is really treading water ahead of the inventory data," said Jason Schenker, economist for Wachovia Bank. "The inventory expectations really seem split this week."
WEAKER DOLLAR
The market also found support from a weaker dollar, which traded near a 20-month low against the euro.
"Oil's short-term rise is mainly fueled by the weakness in the dollar, which has triggered speculative buying in the broader commodity sector," said Frederic Lassere of SG CIB Commodities.
U.S.
Federal Reserve' name=c1> SEARCHNews News Photos Images Web' name=c3> Federal Reserve Chairman Ben Bernanke on Tuesday said the economy of the top energy consumer is poised to expand at a moderate rate and that "uncomfortably high" core inflation should slow.
Inflation risks are "primarily to the upside," he added. Some energy analysts have said concern a slowing of economic growth in consuming nations could damp oil demand.
China's top energy official said on Tuesday that his country aimed to fill its strategic reserves during price dips. Pent-up Chinese demand to build these reserves is helping to underpin prices.
"When international oil prices come down, we will store some (oil)," Chen Deming, vice chairman of the energy policy-setting National Development and Reform Commission, said.
(Additional reporting by Cho Mee-young in Singapore and Randy Fabi in London)