Oil below $83

Oil fell below $83 a barrel on Thursday, after a 15-month high a day earlier, as worries about monetary policy tightening in China knocked commodities across the board. Crude managed to shrug off news of higher US stocks to post its 10th straight day of gains on Wednesday, buoyed by forecasts of a bigger inventory drawdown next week due to freezing temperatures across much of the United States.
But China's central bank surprised markets by raising the interest rate in a 3-month bill auction, which the markets took as a signal of policy tightening, a move that hit all commodities, especially industrial metals. US crude for February delivery fell 63 cents to $82.55 a barrel by 0640 GMT, off a morning high of $83.36, and after settling at $83.18, its highest close since October 9, 2008.
London Brent crude fell 59 cents to $81.30. Further clues to trading will come from US employment data. Weekly US jobless claims, due later at 1330 GMT, as well as December non-farm payrolls data, due on Friday, will show the outlook for the recovery of the world's largest economy, interest rates, and the dollar's direction.
Economists forecast a total of 447,000 new filings for first-time claims for jobless benefits in the week ended January 2, compared with 432,000 in the prior week. The US labour market is improving and the economy is close to the point when the unemployment rate will start to fall, James Bullard, president of the St. Louis Federal Reserve Bank said in Shanghai.
But any demand recovery in the world's top energy user appears patchy so far. US Energy Information Administration (EIA) data released on Wednesday showed an unexpected 1.3-million-barrel increase in crude oil stockpiles last week, while stockpiles of distillates, including heating oil, fell by a smaller-than-projected 300,000 barrels.
Arctic winds have pushed down into the Northern Hemisphere, freezing Europe and parts of Asia, and boosting demand for heating in the United States by some 21 percent above normal. Energy demand has also surged, especially in Britain and France, while heavy snow and record low temperatures in China prompted cities across eastern and central parts of the country to begin rationing power.
Price support also came from the continuing talks between Belarus and Russia over the supply of Russian oil for 2010. Belarus earlier insisted Russia should continue billions of dollars in oil subsidies, potentially complicating talks aimed at resolving a dispute over a pipeline that brings 10 percent of Europe's crude to market.