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Oil jumps after OPEC output rollover; eyes on China
LONDON (Reuters) - Oil rose more than a dollar on Monday in line with other commodities on strong economic data out of China and after OPEC agreed to keep its production targets unchanged.
The Organization of the Petroleum Exporting Countries decided on Saturday, as expected, to maintain its production policy and leading member Saudi Arabia said it still favoured oil prices between $70 and $80 per barrel.
Optimism among investors was boosted by data from China's National Bureau of Statistics showing industrial output in November topped expectations, while headline inflation rose to a 28-month high to 5.1 percent.
"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.
U.S. crude for January rose $1.30 to $89.09 a barrel by 1433 GMT. ICE Brent jumped $1.82 to a high of $92.30. The dollar fell by around 0.45 percent against a basket of currencies.
Bullish sentiment was underlined by oil price hawk Venezuela, which called at the OPEC meeting for $100 oil and said OPEC should not lift output again through the end of 2011.
Prices have also been supported by unseasonably cold weather in Europe, the United States and parts of east Asia leading to higher than normal energy consumption for this time of year.
In a note to clients, Barclays Capital said "a June meeting effectively gives the market the green light for the tilt at $100 and beyond" referring to OPEC's decision not to reconvene earlier next year.
Expectations of higher oil prices have drawn investors into U.S. crude oil futures also known as West Texas Intermediate, data from the Commodity Futures Trading Commission shows.
Speculators raised their net long positions in U.S. crude futures to a record high in the seven days to Dec. 7, the day prices hit $90 a barrel for the first time in over two years.
Several reports, including one from the International Energy Agency last week raising its 2011 oil demand growth forecast, have indicated that fundamentals are strong, with oil stocks beginning to fall from historically high levels.
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But markets are worried that much of the strength in commodities stems from China, where high inflation is pointing to a rise in interest rates.
"The fact is that much higher-than-expected inflation data is being ignored today but this may change as soon as tomorrow," Fritsch cautioned.
Chinese authorities have begun to tighten money supply and are expected to raise interest rates before the end of the year, according to a Reuters poll.
Traders are watching closely for any policy moves that would dampen demand in the world's number one energy consumer.
"We believe a rate rise will come through sooner rather than later, and that this will ultimately trigger a correction in a number of already overheated commodity markets," said Edward Meir, senior commodity correspondent at brokers MF Global.
China's implied oil demand in November rose 13.7 percent from a year earlier to a record of nearly 9.3 million barrels per day, Reuters calculations based on preliminary official data showed on Monday.
(Additional reporting by Rebekah Kebede in Perth; editing by Keiron Henderson)
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