By Aaron Sheldrick

TOKYO (Reuters – Oil prices eased on Tuesday after a steady rally that was driven by strong US demand. This is America’s largest oil consumer and the biggest exporter of its products.

By 0143 GMT, oil had fallen 20 cents (0.2%) to $85.79/barrel after having gained 0.5% on Monday. U.S. crude oil fell 21 cents, or 0.3% to $83.55 per barrel after finishing unchanged in the previous session following testing new highs.

Although China’s coal and power markets are cooling somewhat, global energy prices continue to rise as the temperatures drop with winter.

Edward Moya, OANDA’s senior market analyst said that energy traders should be prepared for colder November forecasts. This will lead to a tight market which will meet unprecedented demand for this winter,” he wrote in a note.

He said, “The oil market will continue to be tight.”

Goldman Sachs (NYSE) stated that Brent could surpass the $90/barrel forecast at year’s end. According to the bank, switching from oil to gas could add 1,000,000 barrels per hour (bpd), to oil demand.

After more than one year of low demand, gasoline and distillate consumption are back to normal.

Market participants will pay close attention to U.S. stock levels over the coming week. According to a Reuters survey of analysts, stockpiles were expected to have risen by 1.7million barrels in the last week. However, inventories of gasoline and distillate were predicted to decline. [EIA/S]