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US oil settles near $95 on IEA forecast, contract expiration

Brent oil futures rose on Tuesday as the global energy watchdog forecast strong demand and on continuing instability in Libya, which could delay a rebound in supply.

The International Energy Agency (IEA) said world oil consumption would increase by 1.3 million barrels per day (bpd) this year, 50,000 bpd higher than it previously forecast.

News that Libya's oil minister resigned also fueled a technical rally, driving prices up and pushing some traders holding short positions out of the market.

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Brent crude rallied to $108 but pared gains, trading up 40 cents to near $107 a barrel. It was heading for its highest close since Dec. 31, and on track for its biggest daily gain in more than a month.

U.S. oil futures gained 62 cents to settle at $99.99 a barrel. The contract rose sharply as traders bought contracts to cover positions ahead of the expiration of the February contract.

Five Libyan officials, including the oil minister, announced they would resign, citing the prime minister's inability to "provide security...in the electricity and oil sectors." The announcement came after news earlier in the day that the prime minister intends to remove protesters who seized eastern ports vital to oil the country's oil exports.

Iran halted its most sensitive nuclear operations under a preliminary deal, raising prospects that the OPEC member will eventually increase oil exports, which curbed gains in Brent oil. 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.