Despite a rising demand, however, "oil prices should remain around their current level over the winter," CGES said in its Monthly Oil Report for November.

Crude oil prices rose during the weekend, pushing toward $79, as Iran began a military exercise that heightened tensions in the Middle East.

The recent stability of oil prices within a relatively high bracket of $70-80 a barrel drew the attention of CGES experts in October, when they interpreted the prices as an outcome of speculative inflow of cash in "paper barrels" by investors looking for higher returns than those available from bank deposits and stocks.

CGES said its findings suggest the supply of crude from member-countries of the Organization of Petroleum Exporting Countries was on the rise, and supplies from non-OPEC nations reached their highest level in more than two years in October, driven by demand from the United States and the former Soviet Union countries.

With those fundamentals in view, "oil prices should remain around their current level over the winter," CGES said. Other analysts said a crisis over Iran could still upset the balance and force changes in current prognoses.

OPEC oil ministers are scheduled to meet Dec. 22 in Luanda, Angola, but are not expected to decide whether to increase or reduce supply, CGES said.

"The global economic recovery, though clearly under way, remains fragile, in spite of the biggest fiscal and monetary stimulus the world has ever seen, and worries remain that it will not survive the ending of the various fiscal stimulus packages," CGES said.

A reversal in the recovery and a slump in demand are seen as potential pressures on the current oil price level, which is over and above OPEC expectations and a source of "delight and relief of OPEC member-countries, who had expected to have to cope with prices closer to $50 per barrel."

A run away from speculative "paper barrels" into other forms of investment can also add pressure on the price, but until any of those factors come into play, the rise in demand and current signs of recovery are seen likely to sustain the market at current levels.

"The main macroeconomic concern at present is that the recovery, now obviously under way, might prove to be fragile once the unprecedentedly large fiscal stimuli end, as they must, and once the monetary easing that has taken place in the U.S., the U.K., across Europe, in Japan and in China begins to be reined in," CGES said.

"Most central banks have twisted the bond yield curves under their influence downwards at the short end to help promote economic recovery, but the amount of debt that has to be financed (particularly in the U.S. and the U.K.) is so large that at some stage or another short-term rates will have to rise."

In the meantime, the center said, with two-year U.S. bond yields now at 0.67 percent, against the 10-year yields of 3.33 percent, the U.S. dollar carry trade that has evolved over the past six months continues to attract adherents. The speculative practice, it said, "has helped to create a number of asset bubbles, including oil."

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