Oil prices firm, Brent climbs above $111

LONDON—World oil prices edged higher on Tuesday, with Brent crude back above $111 a barrel, but concerns over weak global energy demand cast a shadow over the market, analysts said.

New York’s main contract, light sweet crude for June, or West Texas Intermediate (WTI), won 13 cents to $97.50 a barrel.

Brent North Sea crude for delivery in July rose 41 cents to $111.25 in midday London deals.

“Overall, the market continues to consolidate after recent volatility,” said VTB Capital commodities analyst Andrey Kryuchenkov.

“The market certainly remains concerned over potential demand destruction amid elevated prices during a fairly fragile recovery.

“However, at the same time we still believe the downside is limited with the geopolitical risk premium almost erased by now and no changes to the supply picture.”

Crude prices started falling earlier this month on the back of mounting concerns that high price levels could erode energy demand, especially in the United States, the world’s No.1 oil consumer.

The International Energy Agency (IEA) last week cut its outlook for 2011 global oil demand growth by 190,000 barrels per day (bpd) to 89.2 million bpd because of high oil prices and a weaker recovery in rich countries.

It was the first cut in estimated demand for 2011 since the IEA produced its first forecast in the middle of last year. Until then it had constantly revised its estimates upwards as recovery from the economic crisis deepened.

The downward revision reflected mainly an easing of demand in North America due to high prices, the agency had said.