OPEC hikes output, but oil market tensions remain

The decision on Tuesday by the Organisation of Petroleum Exporting Countries to pump an extra 500,000 barrels per day from the start of November was intended to signal the cartel's willingness to respond to supply fears in consumer countries.

But analysts forecast that oil stocks will continue to fall in rich countries during winter months in the northern hemisphere -- the peak period for demand -- applying upward pressure on prices.

"The additional volumes will help, but not alter the fundamentals to an extent where the stock levels do not slide precipitously," said analyst Simon Wardell at research group Global Insight.

"Clearly there will remain a considerable amount of upside price risk."

Geopolitical risks, a lack of global refining capacity and fear of hurricane damage to Atlantic oil installations have also been driving crude prices higher.

Analyst David Kirsch from Washington-based consultancy PFC Energy said the OPEC decision "will take some of the near-term supply concerns off, but shouldn't put too much downward pressure on markets."

Analyst John Hall from London-based John Hall Associates called the move a "token gesture."