Analysts Expect Oil Prices to Keep Rising

The two-day decline in oil prices, with crude futures briefly dipping below $53 a barrel on Tuesday, is a temporary trend that is likely to reverse itself before too long, analysts and traders said.

Tuesday's pullback came in spite of an attack on an Iraqi oil pipeline and persistent concerns that the world's immediate oil-output capabilities have been pushed close to their limits due to unexpectedly strong demand.

While gasoline consumption typically tapers off at this time of year, demand for home-heating fuels begins to rise.

"It would be a rare event to have the market top out ahead of winter," said James Cordier, head trader at Liberty Trading Group Inc. of Tampa, Fla.

Instead Cordier expects a "winter premium" to be built into the cost of oil, with prices in $56 to $57 range, at least until the beginning of December. At that point, analysts will have a better understanding of winter demand and whether there is enough natural gas and heating oil to meet it.