Oil prices rose above $72 a barrel on Wednesday for the first time this month as a falling dollar spurred investors to hedge against inflation by buying commodities.
The second day of strong gains in the oil market came as OPEC members gathered in Vienna to review official output policy, with several representatives of the cartel indicating no likely change in production curbs.
U.S. crude for October delivery rose $1.24 to $72.34 a barrel by 1:10 p.m. EDT, adding to Tuesday's gains of more than $3. London Brent rose $1.33 to $70.75.
The gains came as the U.S. dollar fell near the year's low against a basket of currencies, spurring broad buying across commodities markets.
Spot gold prices held near $1,000 per ounce on Wednesday and global equities prices also were stronger.
It is completely priced in that OPEC will leave output unchanged, said Christopher Bellew, oil broker at Bache Financial. It is going to be gold, the dollar and equities again that will move the market.
So far, none of the 12 OPEC members has stated any need to cut production beyond the 4.2 million barrels per day slashed since last autumn, as higher prices and signs of a strengthening world economy shift the focus away from sluggish fuel demand.
With the price ranging between $68 and $73, what else do you want? The price, everybody likes, consumers and producers, Saudi Arabian Oil Minister Ali al-Naimi told reporters when asked if OPEC needed to change its output policy.
The group's meeting starts at 1930 GMT.
The U.S. Energy Information Administration on Wednesday cuts its global oil demand forecast for 2009 and 2010 and upped its projections for OPEC production.
Soft demand in the United States has forced refiners such as Valero
The market will get a reading on U.S. crude stocks with numbers from the American Petroleum Institute due on Wednesday at 4:30 p.m. EDT. The U.S. Energy Information Administration will release its data on Thursday at 11 a.m. EDT. Both have been delayed a day by Monday's Labor Day holiday.
A Reuters poll showed analysts expected crude stocks to fall by 1.5 million barrels, distillate supplies to increase by 700,000 barrels and gasoline inventories to decline by 1.4 million barrels.
Traders were keeping an eye out as Hurricane Fred formed in the eastern Atlantic Ocean.
Traders were keeping an eye on Hurricane Fred, which strengthened into a powerful Category 3 storm in the eastern Atlantic Ocean on Wednesday but posed no threat to any land.
(Additional reporting by Nick Trevethan in Singapore and Emma Farge in London; Editing by Lisa Shumaker)