Crude futures rose above $74 a barrel on Tuesday, as the OPEC oil cartel revised higher its forecast for global oil demand for this year and 2010.
Crude oil for November delivery gained 80 cents to $74.07 a barrel in electronic trading on Globex.
The contract earlier rose to an intraday high of $74.50.
In its October report, the Organization of the Petroleum Exporting Countries on Tuesday raised its forecast for world oil demand by 200,000 barrels a day for both this year and 2010.
After the revision, world oil demand in 2009 is expected to average 84.2 million barrels a day, which represents a decline of 1.4 million barrels from 2008 levels.
In 2010, global oil demand is expected to average 84.9 million barrels a day, marking a growth of 700,000 barrels a day from 2009 levels.
Also boosting oil prices was weakness in the U.S. dollar.
The dollar index (DXY 75.83, -0.30, -0.39%) , which tracks the performance of the greenback against a basket of other major currencies, fell 0.4% to 75.833.
Charles Perry, president of energy-consulting firm Perry Management, said the dollar will continue to be a big factor for the oil market.
"With the debt the U.S. is piling up and the amount it is borrowing, the future for the dollar is not too bright," Perry said. "This is all dependent on the economy not recovering rapidly."
"Longer term, when the economy does recover, there will be a much higher demand for oil which will drive the price up," he said. "So either way, I do not see much that would cause the oil prices to decline."
Oil prices rose 2% on Monday helped by a weak U.S. dollar and higher oil demand forecasts on Friday from the International Energy Agency for this year and next.
Supply data ahead
Traders are also awaiting inventory data from the American Petroleum Institute, which will be released on Wednesday at 4.30 p.m. Eastern, a day late because of the Columbus Day holiday in the U.S. on Monday.
The Energy Information Administration will release its more closely watched supply report on Thursday morning.
Analysts polled by Platts expect a build in commercial crude stocks of 2.2 million barrels for the week ended Oct. 9. They also project an increase of 1.6 million barrels in gasoline stocks as well as a decline of 1 million barrels in distillate stocks.
Also on Globex, November reformulated gasoline rose 3 cents to $1.83 a gallon and November heating oil gained 3 cents to $1.92 a gallon.
November natural-gas futures fell 4 cents to $4.84 per million British thermal units.
