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Oil steady at higher levels on growth

Wednesday, February 13 07:33:09

Brent crude steadied today, holding just below a nine-month high near $119 per barrel on forecasts for faster-than-expected growth in global oil demand this year, although easing tensions in Iran kept a lid on prices.

The U.S. Energy Information Administration (EIA) and the 12-member Organization of the Petroleum Exporting Countries increased their outlook for world oil consumption growth, citing increasing signs of a recovery in the global economy.

Investors are also taking cues from the currency markets, which are awaiting a meeting of G20 finance ministers and central bankers this week amid increasing international tensions over the euro's strength and the yen's weakness.

"The faster demand forecasts are supporting oil prices, but the concerns of a currency war are weighing on the markets," said Ker Chung Yang, senior commodity analyst at Philips Futures in Singapore.

Front month Brent futures shed 3 cents to trade at $118.63 per barrel by 0718 GMT. It touched a high of $118.75 earlier in the session, around 40 cents away from a nine-month high of $119.17 hit last week.

U.S. crude slipped 1 cent to $97.50 per barrel.

Trading volumes were low as China, Taiwan and Hong Kong remained closed for a third day this week for the Lunar New Year holiday.

Consumption of oil will expand by 840,000 barrels per day (bpd) this year, the OPEC said in its monthly report, 80,000 bpd more than previously expected.

Due to higher demand, and little change in supply expectations from producers outside the group, OPEC expects demand for its crude to average 29.78 million bpd in 2013, up 130,000 bpd from the previous estimate.

The EIA followed suit and increased its forecast for demand growth by 110,000 bpd to 1.05 million bpd in 2013, taking global demand to 90.2 million bpd this year, adding to evidence of global demand surpassing expectations in early 2013. ( C) Reuters