NEW YORK (Reuters) - Oil prices rose above $70 a barrel on Tuesday, snapping their longest losing streak since 2001, as traders bet that government data will show U.S. crude inventories fell last week and colder-than-normal weather will boost demand for heating oil.

Oil prices rebounded from nine consecutive trading days of losses, after falling more than 11 percent since December 1, amid high global crude inventories and weak fuel demand.

U.S. crude for January delivery rose $1.10 to $70.61 a barrel by 1:19 p.m. EST (1819 GMT). In London, Brent crude was up 36 cents at $72.25.

U.S. government data Wednesday may show that crude stocks fell in the United States, the world's top energy consumer, by 1.8 million barrels last week as refineries churned out more fuel and imports dropped, according to an expanded Reuters poll of 13 analysts.

The American Petroleum Institute, an industry group, was to report weekly U.S. inventory data later Tuesday, and the government's Energy Information Administration will issue its more authoritative weekly stocks report early Wednesday.

A 10-day National Weather Service forecast late Monday called for lower-than-normal temperatures in most of the eastern United States, the world's biggest regional consumer of heating oil.

Higher demand for heating oil could help further draw down crude stocks, which stand around 7 percent higher than five-year seasonal averages in the United States as a sluggish economic recovery continues to cut into demand.

Increased industrial activity also may help oil demand recover. U.S. industrial production rose in November by 0.8 percent, the Federal Reserve said Tuesday, more than the 0.5 percent rise that most economists were expecting.

There's a feeling we may see a drop in crude oil and distillate stocks, said Peter Beutel, President of Cameron Hanover in Connecticut. And higher industrial use could be bullish for oil.

The dollar hit a 2-1/2-month high against the euro on Tuesday and rallied to a six-week high versus a basket of foreign currencies.

Oil prices rose in spite of gains in the dollar, which this year have typically signaled that investors are shunning riskier assets such as oil.

OPEC, which pumps a third of the world's oil, slightly raised its forecast for world oil demand in 2010 to an average 85.1 million barrels per day, up by 70,000 bpd from its forecast last month.

But OPEC may also boost crude production. Reuters calculations showed the group's compliance with production curbs to help support oil prices slipped to 58 percent in November, down from 60 percent in October.

It's not surprising that at current prices countries are looking to rethink, said commodity analyst Eugen Weinberg at Commerzbank.

Oil reached a 2009 high around $82 a barrel in late October, after rising from below $33 a barrel last December. Crude surged to a record above $147 a barrel in July 2008, before plummeting, as major world economies sputtered.

(Additional reporting by Chris Baldwin in London, Robert Gibbons in New York, and Jennifer Tan in Singapore; Editing by Walter Bagley)

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