After a rather subdued start to the week which saw futures dip below $68/barrel, crude oil prices began to rebound yesterday after 9 straight days of decline. The oil market was fairly buoyant as a number of reports support improving demand outlook in 2010. In electronic trading on Globex, WTI futures advanced more than 0.5% while January futures were last changing hands at $71.20/barrel. The demand outlook buoyed yesterday after it was reported that US industrial output rose 0.8% in November. Elsewhere the Organisation of Petroleum Exporting Countries (OPEC) re-iterated its belief that the worlds emerging economies would drive growth in 2010, furthermore OPEC projected a 70,000 barrel increase in its consumption estimates for the New Year. According to the American Petroleum Institute (API), crude stocks rose by almost one million barrels last week against expectations of a two million barrel reduction. Similarly gasoline stocks rose by over two million barrels, almost one million more barrels than anticipated, refinery output declined to 80% of total capacity. Distillate stockpiles also caught analysts off-guard this time improving on initial expectations, falling by 2.6 million barrels, analyst consensus suggested a 600,000 barrel drop. The API is the US trade association for the oil and natural gas industry, it represents over 400 corporations in the North America, including producers, refiners. Unlike the Government inventory report, supplied by the Department of Energy (DoE), the API data is compiled from voluntary data supplied by its members. Typically the DoE report carries more weight among crude oil investors. The DoE will release its weekly inventory report this afternoon, and many analysts are still expecting to see falling stockpiles during the past week. In London oil and gas stocks have been fairly positive with most trading higher this morning, BG Group (LSE: BG.) was the best performer, rising around 1.5%. Similarly Edinburgh headquartered Cairn Energy (LSE: CNE) also outperformed the sector rising 1.4%. Royal Dutch Shell (LSE: RDSB) and Irish headquartered Tullow Oil (LSE: TLW) both edged half a percent higher, whilst BP (LSE: BP.) moved in the opposite direction dropping more than half a percent. In the FTSE250 trading was more mixed, Dana Petroleum (LSE: DNX) and Premier Oil (LSE: PMO) both climbed 1.3%, followed by JKX Oil and Gas (LSE: JKX) rose more than three quarters of a percent. Meanwhile Gulfsands (LSE: GPX) fell nearly 2%, Afren (LSE: AFR), Soco International (LSE: SIA) and Dragon Oil (LSE: DGO) were also trading in the red. In the AIM market several junior oil and gas stocks were making substantial gains this morning lead by Range Resources (AIM: RRL) who jumped 33%, also advancing strongly were Aurelian Oil and Gas (AIM: AUL ) and Max Petroleum (AIM: MXP) with both stocks rising 20% this morning. Ithaca Energy (AIM: IAE) and Petrel Resources (AIM: PET) followed climbing 11% and 9% respectively, while Pantheon Resources (AIM: PANR) and Sterling Energy (AIM: SEY) both added more than 5% each. Mediterranean Oil and Gas (AIM: MOG), Petroceltic International (AIM: PCI) and Gulf Keystone (AIM: GKP) were also trading positively this morning

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