LONDON, Dec 10: World oil prices rallied towards $90 per barrel on Monday, rebounding from heavy losses ahead of the weekend, as the market looked to a possible surge in demand for heating fuel, traders said.

In London afternoon trade, Brent North Sea crude for January delivery gained 67 cents to $89.31 per barrel.New York’s main contract, light sweet crude for January delivery, won 90 cents to $89.13 per barrel.

“Concerns over the US economy and the possibility for declining oil demand growth was countered by the weaker greenback and on expectations that temperatures over the next two weeks may drop below average in US Northeast, ahead of the peek winter demand period for heating oil,” Sucden analyst Michael Davies said.

Oil prices had tumbled on Friday, closing down almost $2 in New York, as concerns resurfaced that slower US economic growth could dampen crude oil demand, traders said.

Since striking recent record highs close to $100, crude prices have lost more than 10 per cent in value in choppy trading.

Dave Ernsberger, Asia director of global energy information provider Platts, said the oil market traditionally cools at this time of year and there are now no strong factors that would lead to a rally.

“This is when you would expect prices to fall pretty significantly, actually,” he said, describing the mood as “cautiously bearish.”

Oil market experts say there are widespread fears of a US-led global economic slowdown that could dampen demand for energy, especially oil.

Last Wednesday, prices initially spiked in reaction to a decision by Opec, at a crucial meeting in Abu Dhabi, to leave its daily crude output quota unchanged at 27.25 million barrels.

Values subsequently fell back, which Ernsberger said probably reinforces bearish sentiment.

Opec member Iran, and China’s Sinopec, on Sunday signed a contract worth an estimated $2 billion to develop a major Iranian oil field.—AFP