LONDON (Reuters) - Oil hovered near $88 a barrel after touching a 25-month high on Thursday, lifted by increased consumption in the world’s top two oil consuming nations and after OPEC revised up its 2011 demand growth forecast.
U.S. crude for DecemberCLc1 was up 6 cents to $87.57 a barrel, having pared losses after earlier touching a more than two-year high of $88.63 earlier in the session. ICE BrentLCOc1 fell 6 cents to $88.90 a barrel by the same time.
China’s industrial production grew 13.1 percent in October from a year earlier, sending oil use in the world’s second biggest consumer to a record 8.92 million barrels per day (bpd).
Crude inventories in the U.S. unexpectedly fell last week. Declines in fuel stockpiles exceeded forecasts on accelerating demand for distillate fuels such as diesel, government data showed on Wednesday.
“There was a downwards draw in stocks in the United States and in countries like China there seems to be much better demand,” said Christoper Bellew, a broker at Bache Commodities, adding, “I don’t think it’s the feeding frenzy we had in 2008 but we are possibly in a range between $80-$95 a barrel.”
Prices drew support after OPEC raised its 2011 estimate of global oil demand growth by 120,000 barrels per day (bpd) to 1.17 million bpd.
For a graphic showing the technical outlook, see:
Oil prices are on course to have risen in seven of the last eight sessions, pushing them further above a previous range of $70-$80 a barrel where they have mostly traded for a year.
“We think prices are on their way for a test of the $90 mark, at least in the Brent market,” said Stefan Graber, a commodities analyst with Credit Suisse in Singapore.
Other traders and analysts also expected a breach of $90 a barrel but did not expect the rally to push prices as far as $100 a barrel.
“I think you’ll probably touch $90 maybe break above it and then it should slow down and then come off a little bit,” said Andrey Kryuchenkov, commodities strategist at VTB Capital.
Oil prices rose despite a stronger dollar on Thursday and weaker equities in a sign that the market is once again focusing on its own fundamentals of supply and demand.
Additional reporting by Isabel Coles and Alejandro Barbajosa in Singapore; editing by William Hardy