By Simon Falush
LONDON (Reuters) - Oil rose above $107 a barrel on Tuesday as the International Energy Agency raised its forecast for global oil demand this year, citing accelerating economic growth that would outstrip supply.
The West's energy watchdog said world oil consumption would increase by 1.3 million barrels per day (bpd) this year, 50,000 bpd higher than it previously predicted.
This means that supply will be tight, even as shale oil production in the United States reaches record highs, with commercial oil stocks in the world's industrialised nations plummeting in November by 53.6 million barrels, the biggest monthly decline since 2011.
"Most OECD economies have by now largely exited the restraints of recession, with strong gains in some countries in the energy-intensive manufacturing and petrochemical sectors."
Brent crude rose $1.02 to $107.37 a barrel by 0922 GMT after dropping to a low of $105.81 in the previous session.
U.S. oil futures slipped 9 cents to $94.28 from Friday's close. There was no settlement on Monday on the New York Mercantile Exchange due to a U.S. holiday.
Oil also got support from an increase in risk appetite across the market after the People's Bank of China dumped more than 255 billion yuan into the financial system, easing concerns about a credit crunch that could hamper growth in the world's second-biggest economy.
Helping keep a cap on gains, Iran halted its most sensitive nuclear operations under a preliminary deal, raising prospects that the OPEC member will eventually increase exports.
"The Iran situation appears to be making progress, and that is taking some of the geopolitical tension off, but lifting oil sanctions will be the last to happen," Victor Shum, vice-president of energy consultancy IHS Energy Insight.
Now that Iran has fulfilled its initial nuclear commitments under the deal, the six current customers of Iranian oil will be able to maintain purchases at current levels for six months, the duration of the interim nuclear deal, without risk of sanctions.
In one sign of easing, Japan's main private ship insurer on Monday resumed normal coverage for tankers carrying Iranian oil, an official with the Japan P&I Club, said.
A U.S. official said Iran was currently exporting about 60 percent less oil than it was two years ago and would be held to those reduced levels.
SUPPLY WORRIES
Also helping to support prices were worries of prolonged disruptions from South Sudan and OPEC member Libya.
South Sudan's president said his soldiers had taken back regional capital Malakal from rebels, but insurgents battling the government dismissed that report.
Libya plans to remove protesters who have seized eastern ports vital to oil exports within the next few days, Prime Minister Ali Zeidan said.
Since the summer, a group of heavily armed demonstrators has occupied three eastern oil ports, which together had accounted for 600,000 bpd of exports, to force the central government to give it political autonomy.
"While Libya seems to be making progress in raising exports, there are concerns out there of protests returning and hurting oil output," Shum said. "You have South Sudan in conflict and growing unrest in Iraq."
(Additional reporting by Manash Goswami in Singapore; editing by Jane Baird)
