Oil futures fluctuated Friday as investors assessed whether reports suggesting crude supplies are tight justify extending the recent price rally.With little news to move the market, traders debated whether oil supplies are adequate to meet fourth quarter demand. Many analysts think crude supplies are growing and doubt demand is as strong as recent forecasts by the Energy Department and International Energy Agency suggest. These analysts expect oil prices will soon begin a seasonal decline to $70 a barrel, or lower.

"A substantial upswing in OPEC production combined with a further price induced downdraft in global demand will eventually result in much looser fourth quarter (supply) balances both domestically and globally than would be implied by current $83 (prices)," Jim Ritterbusch, president of Ritterbusch and Associates of Galena, Ill., said in a research note.



Others say the evidence suggests crude supplies are falling, pointing to Thursday's Energy Department report that showed domestic crude inventories fell last week and an IEA report that concluded oil inventories held by the world's largest industrialized countries have fallen below a five-year average.

"This is a concern," Stephen Schork, a trader and analyst in Villanova, Pa., said in a research note. "Despite relatively weak demand ... crude stocks still fell last week."

The debate has caused volatile price swings. On Monday, for instance, crude prices dropped more than $2. Each day since, prices have risen more than $1. But prices have been stuck in a rough range between $78 and their Sept. 20 record trading high of $83.90 for more than a month.

"It's just kind of a push and shove (market)," Ritterbusch said in an interview.

On Friday, light, sweet crude for November delivery rose 16 cents to $83.24 a barrel by late morning on the New York Mercantile Exchange, but alternated frequently between gains and losses.

November gasoline rose 0.19 cent to $2.0685 a gallon, and heating oil futures fell 0.63 cent to $2.241 on the Nymex.

Natural gas for November rose 7.3 cents to $6.949 per 1,000 cubic feet.

In London, November Brent crude rose 20 cents to $80.35 a barrel on the ICE Futures exchange.

While oil prices have soared in recent weeks, gasoline prices have held steady. The average national price of a gallon of gas was unchanged overnight at $2.76, according to AAA and the Oil Price Information Service. Many analysts had expected gas prices to rise to keep pace with oil's 20 percent rally between late August and late September. But falling demand has kept gas prices in check.

While some analysts believe oil's rise is justified by underlying supply and demand fundamentals, others are perplexed. Many point say the high prices are due to speculative buying.

"Providing fundamental rationale behind this week's rally is a more difficult process since it has developed amidst a modicum of bullish news," Ritterbusch said. "Price movement is being heavily influenced by nontraditional investment flows."