LONDON (AP)-- Oil prices floated around $58 a barrel on Tuesday after a drop of more than $2 a day earlier as the market shrugged off a new report predicting a strong increase in demand through the year.

The International Energy Agency said demand is expected to grow at nearly double the pace of 2006. The agency raised its 2007 global oil demand growth forecast to 1.55 million barrels per day for the year compared with growth of 800,000 barrels per day last year.

Traders said the market was also looking ahead to Wednesday's report on U.S. inventories.

On Monday, light sweet crude prices dropped $2.08 a barrel because of moderating U.S. temperatures and expectations that there will be a crude surplus in the spring.

Light, sweet crude for March delivery rose 30 cents to $58.11 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Europe. Brent crude at London's ICE Futures exchange rose 3 cents to $56.63 a barrel.

According to a Dow Jones Newswires survey, U.S. stocks of heating oil and other distillate fuels are expected to decline by about 4 million to 5 million barrels below the 136.3 million barrels reported last week because of recent cold weather.

Gasoline and crude stocks are both expected to rise in the data released by the U.S. Department of Energy's Energy Information Administration.

The U.S. winter chill of the past couple weeks, which drove prices briefly above $60 on Friday, is expected to ease up by late February, leading traders to believe that heating fuel demand will weaken.

Natural gas rose 8.6 cents to $7.312 per 1,000 cubic feet on the Nymex and heating oil rose 0.81 cent to $1.6535 a gallon.