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Oil prices rise on forecasts for stronger demand

US oil prices rose again Tuesday, backed by forecasts for stronger demand as the market awaited Wednesday's weekly US oil inventory report.

A barrel of West Texas Intermediate for delivery in March settled at $97.51, up 48 cents compared with the level on Monday.

In London, a barrel of the European benchmark Brent crude traded at $118.66, up 53 cents from Monday.

The jump in oil prices came as the Organization of Petroleum Exporting Countries revised upward its demand forecast for 2013.

OPEC said it expects total demand this year to be 89.68 million barrels per day, up 130,000 barrels a day from its forecast a month ago.

"That report is supporting the market," said Again Capital trader John Kilduff.

The OPEC estimate was shadowed by a report by the US Department of Energy which projected 2013 global demand of 90.2 million barrels a day, up 100,000 barrels a day from its January estimate.

Phil Flynn, an analyst with the Price Futures Group in Chicago, said oil also gained support from the increase in the equity markets. In afternoon trade, the Dow Industrial index was up 61.01 points while the S&P 500 rose 3.51 points.

Oil, according to Flynn, also picked up strength from a 0.39 percent rise of the euro against the dollar. Because oil is traded in dollars, crude becomes cheaper for buyers in other currencies when the dollar falls in value.

"Right now we're definitely getting a bounce off the currency and the stronger stock market," Flynn said.

Flynn said markets were waiting for Wednesday's report on US crude stocks.

"The market right now seems to be a little bit indecisive," Flynn said. "It does seem like we're in a wait-and-see mode."