Benchmark Brent blend crude oil was trading at $20.51 a barrel at 1043 GMT in London, up one cent on the day, after hitting a peak of $20.56 in early trade, its strongest value since October 1997.

Oil has rocketed a full $1 a barrel in the space of a week amid fresh evidence of restraint by Opec producers, strong U.S Products markets and improving refinery profit margins.

The market posted a solid 40 cent gain on Monday after an explosion at a U.S. Oil refinery strengthened U.S. Refined products values.

On Tuesday the market drew more strength from International Energy Agency estimates that world oil demand growth would quicken markedly next year after slow increases in the past two.

"The nascent economic recovery in Asia should continue to gather momentum and non-Opec supply growth will be sluggish," the Paris-based IEA said in its monthly Oil Market Report.

Brokers said good physical demand for crudes in Europe, triggered by an upswing in refinery profit margins, also helped underpin the market.

The IEA said initial estimates for demand in 2000 showed growth of 1.8 million barrels a day (bpd) to 77 million, double the 900,000 bpd increase this year.

Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.