LONDON—Oil prices firmed after the International Energy Agency raised its short- and medium-term forecasts for oil demand.
However, gains were capped by a stronger dollar against a basket of major currencies. A strong dollar typically weakens crude prices as commodities denominated in the greenback become more expensive to buy for investors holding other currencies.
Ahead of the New York day, the front-month August Brent contract on London's ICE futures exchange was up 72 cents, or 0.6%, at $113.73 a barrel. The front-month July contract on the New York Mercantile Exchange was up 21 cents or 0.2%, at $95.02 per barrel.
In its monthly oil market report, the Paris-based IEA said there is a "clear need" for extra crude oil from the Organization of Petroleum Exporting Countries, as it increased its demand forecast for 2011 and cut its outlook for oil production from countries outside OPEC.
If OPEC doesn't pump extra oil, the market will tighten substantially resulting in "overheating prices" and economic damage, said the IEA, which represents major energy-consuming countries.
In its medium-term report, also published Thursday, the IEA raised its 2015 oil demand forecast and hiked its five-year oil price forecast by $19 a barrel.
In prior editions of its closely watched monthly and medium-term market reports, the agency had taken a more cautious approach to economic and oil demand growth. It now says it expects both to be stronger even in the face of high oil prices.
Oil prices slumped Wednesday on the economic and political crisis in Greece and concerns of potential wider contagion that could spread to the euro zone's banking system.
