Oil prices rose Tuesday for the first time in nine days with OPEC predicting energy demand will rebound faster than it had previously thought.
Benchmark crude for January delivery added $1.18 to settle at $70.69 a barrel on the New York Mercantile Exchange. In London, Brent crude for January delivery rose 16 cents to settle at $72.05 a barrel on the ICE Futures exchange.
Prices headed upward just after the Organization of Petroleum Exporting Countries said it expected the world would consume 70,000 barrels more crude next year than previous estimates.
The 12-nation group, which supplies about 35 percent of the world's crude, said developing nations would drive demand higher.
The International Energy Agency in Paris also predicted late last week that demand was rebounding.
That didn't seem to matter and prices for crude and gasoline continued to fall through Monday, slipping below two-month lows on doubts about how much energy can be consumed during an extended economic downturn.
There are still enormous amounts of natural gas, heating oil, gasoline, and other fuels in storage. But after an extended decline that saw a barrel of oil fall by almost $9 this month, money began to flow back into energy markets.
"Oil was looking for an excuse to rally, and they got it with the OPEC report," analyst Phil Flynn said. "But the market is ignoring the fact that we have an oversupply of everything."
For most of the year, the U.S. only sipped at its energy reserves, cramming surplus crude and petroleum products into storage. With such a large stockpile at home, and more waiting overseas on idled oil tankers, Flynn said it's hard to justify rising crude prices.
But that has been the story all year.
Oil prices doubled between March to October as investors pumped money into crude futures as a hedge against inflation. Prices have declined from a 2009 high of $82 a barrel, but largely because the dollar has bounced back. The price of crude and the dollar often move in opposite directions, with investors playing one off the other.
On Tuesday, both the dollar and the price of crude rose.
At the pump, retail gas prices lost a half penny overnight to a new national average of $2.598 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 3.7 cents cheaper than last month, but it's 93.8 cents more expensive than the same time last year.
In other Nymex trading in January contracts, heating oil lost less than a penny to settle at $1.9033 a gallon while gasoline added 1.84 cents to settle at $1.8451 a gallon. Natural gas rose 19.1 cents to settle at $5.523 per 1,000 cubic feet.
Associated Press Writer Alex Kennedy contributed to this story from Singapore.