Oil prices rise on stronger energy demand

World oil prices rose on Friday on signs of rising energy demand in the United States, the world's biggest consumer, dealers said.

Brent North Sea crude for delivery in February climbed 33 cents to 73.70 dollars a barrel in morning London deals.

New York's main futures contract, light sweet crude for delivery in January, jumped 72 cents to 73.37 dollars per barrel.

"Expectations of colder weather in the US are likely to help support the market," VTB Capital commodities analyst Andrey Kryuchenkov.

Crude futures had fallen sharply on Thursday as investors took profits following the previous day's strong gains on indications of stronger energy demand in the United States.

Analysts said stronger US energy demand, boosted by the need for heating fuel during the northern hemisphere winter, is likely to continue supporting oil prices.

Crude futures had soared by 1.50 dollars on Wednesday following the latest snapshot of US energy inventories.

The US Department of Energy (DoE) said distillate stockpiles sank by a heavier-than-expected 2.9 million barrels last week, indicating a pick-up in heating fuel demand.

Data for distillates, which include heating oil, are being closely tracked amid the start of the northern hemisphere winter.

The DoE on Wednesday added that American crude oil reserves dived by 3.7 million barrels last week, which was also far larger than market expectations.

On Tuesday, the OPEC oil producers' cartel upgraded slightly its forecast for world oil demand growth next year but said usage in advanced economies would contract again.

The Organization of Petroleum Exporting Countries said demand would grow by 0.82 million barrels per day (bpd) or 0.9 percent to average 85.13 million bpd, up slightly from its previous forecast for an increase of 0.75 million bpd.

But growth would be driven by developing countries, with demand in industrialised or OECD (Organisation for Economic Co-operation and Development) nations continuing to contract, the cartel said.

OECD oil demand was set to contract 0.28 percent in 2010 after falling by a record 3.9 percent in 2009.

Last year was "one of the worst years," with global demand estimated to have contracted by 1.39 million bpd or 1.6 percent to 84.31 million bpd, OPEC said.

The cartel is set to hold a meeting to discuss output on December 22 in the Angolan capital Luanda.