Filed at 3:50 p.m. ET
NEW YORK (Reuters) - Oil prices pushed higher on Friday after the U.S. Congress granted President Bush war powers if necessary to disarm Iraq.
Fears that a war with Iraq would disrupt Middle East oil supplies outweighed recent signals of slowing oil demand, and reports the Organization of Petroleum Exporting Countries is pumping above production quotas.
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New York crude oil futures rose 40 cents to $29.37 a barrel, bouncing back from three-week lows hit Thursday. London Brent futures were up 25 cents to $27.99 a barrel.
The U.S. Senate Friday followed the Thursday approval of the House of Representatives with a strong vote granting authority for a potential U.S. attack to disarm Iraq.
The fear of a U.S. invasion to unseat Iraqi President Saddam Hussein had driven prices up more than 40 percent this year, although Monday Bush sounded less hawkish, saying no attack was imminent.
The Bush administration has yet to convince France, Russia and China to agree to a new tough Security Council resolution governing the return of weapons inspectors to Iraq.
The White House Thursday dismissed an Iraqi offer to the United States to visit suspected weapons sites, saying inspections were a United Nations matter.
Bullish sentiment was helped by initial results of an inquiry carried out by French, Yemeni and American investigators suggesting the Oct. 6 explosion aboard French-flagged oil tanker Limburg was due to an attack.
A French inspector said Thursday debris of what could be an attacking boat had been found on the damaged tanker, although a Yemeni official said the debris could be from one of the tanker's own lifeboats.
DEMAND GROWTH STALLING
Meanwhile, world oil demand growth is stalling, the International Energy Agency said Friday.
The Paris-based IEA said continued high oil prices also were slowing consumption among manufacturers and heavy industry, reflecting ``the impact of high oil prices on oil consumption in the broader economy.''
The agency's Monthly Oil Market Report sliced its forecast for world oil demand growth next year to 1.04 million barrels a day, cutting 100,000 barrels per day (bpd) for a projection of 77.68 million.
OPEC increased supplies by 430,000 bpd in September to pump 2.2 million bpd above the official limit, the IEA said.
Leading OPEC producer Saudi Arabia pumped 15 percent above its official OPEC crude oil production quota in September, far higher than estimated by independent experts, a source with access to an internal Saudi report said Thursday.
Analysts say OPEC is looking to take full advantage of oil's strength despite the group's formal policy of curbing production tightly to bolster prices.
OPEC last month held official output limits at the lowest in the level in a decade, spurring warnings that high energy costs could delay world economic recovery and hurt fuel demand into next year.
U.S. inventory reports this week showed the lowest stockpiles in the nation since 1976 after heavy storms off the Gulf Coast in late September and early October slashed offshore production.