* Brent near 26-mth high, backwardated first time since 2008
* Technicals show U.S. crude at $91 [ID:nL3E6N302E]
* Coming Up: U.S. Non-farm payrolls Nov; 1330 GMT
(Recasts headline, adds China policy, updates prices)
By Alejandro Barbajosa
SINGAPORE, Dec 3 Oil was steady near 25-month
highs on Friday following a slew of upbeat U.S. economic data
that boded well for demand from the world's top user, ahead of
a jobs report expected to show employment expanded for a
second straight month in November.
U.S. crude for January fell 2 cents to $87.98 a barrel at
0706 GMT, still headed for a second straight weekly gain,
after ending at $88 on Thursday, the highest settlement since
October 2008. Prices touched $88.63 on Nov. 11, the highest
intraday price in 25 months.
Jobs, home sales and retail sales data from the U.S. on
Thursday pointed to a sustained economic recovery, while
statistics earlier this week showed factory activity in China,
the world's second-largest oil user, reached a seven-month high.
China will switch to a prudent monetary policy
from a moderately loose stance, the Communist Party's top
leaders decided on Friday, a change that could pave the way
for more interest rate increases and lending controls, the
state Xinhua news agency reported. [ID:nTOE6B2048]
While talk of higher rates in China has kept a lid on oil
price gains, analysts do not expect to see much of a dent in
the country's appetite for crude.
"While financial risks remain, we feel that the increasing
synchronicity of global economic growth provides a resurgent
force to physical commodity demand," JP Morgan analysts headed
by Lawrence Eagles said.
The European Central Bank resisted pressure on Thursday to
commit to a major bond-buying program to contain the euro zone
debt crisis, but traders said the ECB had been quietly buying
bonds anyway, boosting the euro and raising the appeal of
riskier assets, including commodities. [ID:nLDE6B10I4]
"Oil, like most global markets, has been buffeted by
concerns surrounding the euro zone problems and their
potential broader implications," JP Morgan said.
Rising oil demand from emerging and developed economies is
also changing the price structure of crude futures markets.
ICE Brent contracts for earliest delivery or settlement are
now trading at a premium to later contracts for the first time
since May 2008, according to Barclays Capital.
ICE Brent for January LCOc1 was unchanged at $90.69 by
0630 GMT, after touching $90.84 on Thursday, the highest price
in 26 months. The February contract was down 2 cents at $90.63.
This pricing structure, known as backwardation, is
replacing the prevalent so-called contango of the past two
years, where earlier contracts traded at a discount to future
ones. Contangos are reflective of oversupplied markets, while
the turn to backwardation signals a tightening balance.
"The combination of the effect of falling prompt inventory
at the front of the curve and a healthy degree of producers
selling along the curve has helped to pivot the (Brent) curve
back towards flat," Barclays Capital analysts headed by Paul
Horsnell said in a weekly report.
U.S. nonfarm payrolls likely increased last month by
140,000, according to a Reuters poll, amid strong gains in
private hiring reported on Wednesday. The report is due at
1330 GMT. [ID:nN30116474]
Fresh signs the U.S. economy has broken out of its summer
soft patch emerged on Thursday as data showed a gauge of
jobless benefits hit a new two-year low last week and pending
home sales unexpectedly rose in October. [ID:nN02209260]
The picture also brightened as retailers recorded their
best sales gains in four years in November, with shoppers
drawn in by deals throughout a month that culminated with a
surge in "Black Friday" traffic.
Both U.S. heating oil and gasoline futures rallied on
Thursday, supporting crude's rise. Heating oil rose amid
colder temperatures in the U.S. Northeast, the biggest heating
oil market. Gasoline gained on regional supply tightness in
the key East Coast market.
Household, government spending and exports drove euro zone
economic growth in the July- September period, official data
showed on Thursday. [ID:nLDE6B118S]
In other markets, the Nikkei ended flat
holding on to its Thursday's gains of almost 2 percent, after
hitting a six-month intraday high of 10,254.00.
(Editing by Himani Sarkar)