LONDON -- Oil prices edged higher Thursday on a weaker U.S. dollar, OPEC's decision to maintain production levels and a new report that says the slump in global oil demand will not be as bad as initially feared.
Benchmark crude for October delivery edged up 25 cents to $71.56 a barrel on the New York Mercantile Exchange. Earlier in the day, the contract rose as high as $72.44. On Wednesday, the contract rose 21 cents to $71.31.
Crude has jumped from $68 a barrel in two days as the dollar weakened to its lowest level this year. Because crude is priced in the U.S. currency, it becomes cheaper when the dollar falls. Some investors also use commodities like oil and gold as a hedge against inflation and dollar weakness.
The euro was slightly lower Thursday at $1.4585 after breaking through $1.46 on Wednesday.
The Organization of Petroleum Exporting Countries, responsible for about 40 percent of the world's oil production, confirmed Thursday at its meeting in Vienna that it will keep crude production levels the same.
OPEC said in a statement that "market fundamentals have remained weak" and that "whilst there are signs that economic recovery is under way, there remains great concern about the magnitude and pace of this recovery," especially in the West.
Meanwhile in Paris, the International Energy Agency said the slump in global oil demand in 2009 will be less severe than previously forecast and predicted consumption would rise in 2010 as the world economy stabilizes.
The IEA said Thursday that crude demand will reach 84.4 million barrels a day this year, down 2.2 percent from 2008 levels, but better than the 2.7 percent decline the agency forecast previously. The IEA also raised its forecast for oil demand in 2010 to 85.7 million barrels a day, or half a million barrels a day more than its previous forecast.
Also, investors were awaiting the release of the U.S. government weekly inventory data later Thursday morning.
Analysts expect a decline in crude and gasoline stocks, but are looking for a rise in distillates stocks used to make diesel fuel and heating oil, according to Platts, the energy information arm of McGraw-Hill Cos.
Prices at the pump remained mostly flat overnight, climbing 0.3 cents to $2.576 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. Prices are 6.7 cents below levels of a month ago and down $1.092 from a year ago.
In other Nymex trading, gasoline for October delivery was down 1.4 cents $1.8141 a gallon, and heating oil fell 0.33 cents to $1.7911 a gallon. Natural gas was off 1.2 cents to $2.817 per 1,000 cubic feet.
