Oil climbed to 25-month highs above $88 a barrel on Thursday, lifted by increased demand in the world’s top two oil consuming nations and after Opec revised up its 2011 demand growth forecast.
US crude for December rose 20 cents to $88,01 a barrel by 1320 GMT, after touching $88,63, its highest since October 2008.
ICE Brent rose 3 cents to $88,99 a barrel after touching more than a two-year high earlier.
China’s industrial production grew 13,1% 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 US unexpectedly fell last week, while 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.”
Later in the session, 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.
Oil prices are on course to have risen in eight of the last nine 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 yesterday and weaker equities in a sign that the market is once again focusing on its own fundamentals of supply and demand.
An Energy Information Administration government report on Wednesday showed a 3,3 million-barrel drawdown in US crude inventories last week, compared with forecasts for a 1,4 million-barrel gain.
Stocks of distillates including diesel and heating oil dropped by 4,97 million barrels, led by a 16 percent gain in distillate demand over the past four weeks compared with year-ago levels.
US economic growth showed more tentative signs of improving on Wednesday as jobless benefit claims hit a four-month low last week and the international trade gap narrowed in September.