Oil rose on Monday as strong Chinese economic data lifted commodities even as the country's soaring inflation did not lead to an interest rate hike to cool the economy. Europe's cold snap and a cold front moving across the US Midwest into the heating oil-consuming north-east also supported oil along with the dollar's weakness.
-- US, Europe cold weather lifts oil demand, prices
Oil's push above $89 a barrel came after the Organisation of the Petroleum Exporting Countries decided on Saturday, as expected, to maintain its production policy, and Opec heavyweight Saudi Arabia said it still favoured oil prices between $70 and $80 per barrel. US crude for January delivery rose 73 cents to $88.52 a barrel at 11:50 am EST (1650 GMT), after posting a session peak of $89.49. US crude prices reached a 26-month high of $90.76 on December 7. Total US crude trading volume was more than 321,000 lots near midday in New York, 51 percent below the 30-day average. ICE Brent crude for January rose 75 cents to $91.23 a barrel, off a $92.30 peak. The January Brent contract expires on Thursday.
"The complex has begun the week in strong fashion with support forthcoming from a rebound in the euro and the fact that China didn't boost interest rates over the weekend," Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois, said in a note.
Investor optimism grew after data from China's National Bureau of Statistics showed industrial output in November topped expectations, while headline inflation rose to a 28-month high to 5.1 percent.
Investors were concerned last week that inflation worries in China would lead authorities, who already have hiked lender reserve requirements. China's implied oil demand in November rose 13.7 percent from the year-ago period to a record of nearly 9.3 million barrels per day, Reuters calculations based on preliminary official data showed.
Crude oil processing in the world's No 2 oil consumer hit a record 8.92 million bpd.
"It's not just oil (that is strong) it is the entire commodities spectrum," said Carsten Fritsch, an oil analyst at Commerzbank in Frankfurt, as Tokyo rubber futures and London copper hit historic highs, while gold also rose.
Oil prices also have been supported by unseasonably cold weather in Europe, the United States and parts of east Asia, boosting heating fuel demand. US overall heating demand this week is expected to be 13.6 percent above normal, the National Weather Service forecast Monday. Heating oil demand will average 4.8 percent above normal, while heating demand for natural gas will average 12 percent above normal, the NWS said. Leading Opec producer Saudi Arabia said on Saturday it still favoured a $70-$80 oil price range. Saudi Oil Minister Ali al-Naimi told reporters at Opec's Saturday meeting in Quito, "$70-$80 is a good price," seemingly restating a two-year-old policy as Opec kept output restraints unchanged despite prices recently topping $90 a barrel.
Comments
Comments are closed.