US light crude settled up $2.12 at $62.44 a barrel, following a loss of 31 cents on Monday. London Brent crude rose $2.00 to $60.24. The rise came as chilly weather in parts of Texas and along the Eastern seaboard triggered a 10 percent spike in US natural gas prices and a 5 percent jump in heating oil.
"We''ve gone away from worrying about supply and are concerned that demand may be stronger than anticipated if we get an early winter and stay cold through March," said Phil Flynn, analyst at Alaron Trading.
An early-season Nor''easter - a storm that brings chilly Northeast winds to the coast - was pelting the Eastern seaboard Tuesday with parts of the Northeast expected to get some of the season''s first snow.
Adding to strength, ConocoPhillips said on Tuesday that its big oil refinery in Linden, New Jersey, experienced a brief power glitch that triggered a plant-wide shutdown.
The company could not say how long the 263,000-barrel-per-day refinery would remain out of service. The outage added to a pile of US energy production troubles after a parade of hurricanes battered the US Gulf Coast in recent months.
As of Tuesday, 69 percent of the Gulf of Mexico''s 1.5 million bpd of crude production capacity was shut along with 56 percent of the region''s 10 bcfd of natural gas production, according to the Minerals Management Service.
Since August 26, hurricanes shut 68.55 million barrels of crude output - nearly three-and-a-half days of total US consumption, - and 348.093 billion cubic feet of natural gas output, the MMS report showed.
On shore, four US oil refineries remained completely shut in the aftermath of hurricanes Katrina and Rita, accounting for 1.03 million bpd of fuel production, or 6 percent of the nation''s capacity.
Dealers were looking ahead to Wednesday''s US inventory figures for fresh insight into the health of demand in the world''s biggest energy consumer with prices zipping along near historic highs.
Recent data from the Energy Information Administration showed US demand for oil products has been running about 3 percent below last year.
"The current trend is demand destruction. Nobody knows whether that is right or not. We''re looking for any evidence demand destruction is the case," said Deborah White, senior energy analyst at SG Commodities in Paris.
US distillate stocks - heating oil and diesel fuel - are expected to have fallen by 800,000 barrels in the week ended October 21, a Reuters survey of analysts showed.
US crude stockpiles, however, were likely to have risen by 1.9 million barrels due to heavy imports, marking a third successive weekly increase, the survey found.
Concerns over waning demand have pulled US oil prices sharply below the peak near $72 hit in late August/
The head of oil major BP said Tuesday that energy prices are not likely to fall much further.
"Prices are expected to be well supported into the winter," BP Chief Executive John Browne said.