Oil steady to higher after OPEC output unchanged

Tuesday, 14 December 2010 00:01 - - {{hitsCtrl.values.hits}}

Perth (Reuters): Oil prices were steady to higher on Monday after the Organization of Petroleum Exporting Countries (OPEC) met over the weekend and agreed to keep crude oil output levels flat.

U.S. crude for January rose 29 cents to $88.08 a barrel by 9:58 p.m. EST. ICE Brent rose 16 cents to $90.64.

Several reports, including one from the International Energy Agency raising its 2011 oil demand growth forecast, indicated that fundamentals are strong, analysts said.

“It looks like fundamentals are getting stronger heading into winter,” said Tony Nunan, a risk manager with Tokyo-based Mitsubishi Corp.

The International Energy Agency lifted its 2011 oil demand growth forecast by 130,000 bpd to 1.32 million bpd from its previous monthly report.

On Friday, U.S. data showed consumer sentiment rose more than expected in early December to the highest level in six months, according to the Thomson Reuters/University of Michigan survey, while the government said the country’s trade deficit shrank much more than expected in October.

Severe winter weather in the United States and Europe is also seen boosting energy demand.

Europe is expected to have colder than normal temperatures with energy demand above normal, according to DTN Meteorlogix, and a strong blizzard has dumped large amounts of snow in the U.S. Midwest.

Fears that China would increase interest over the weekend due to rising inflation failed to materialize, but traders said they were still closely watching for any move that would dampen demand in the world’s number one energy consumer.

“There was concern -- and still is, I think -- that China may increase interest rates, especially now that inflation is over 5 percent,” Nunan said.

China’s headline inflation rose to a 28-month high of 5.1 percent in the year to November, from 4.4 percent in October, the National Bureau of Statistics (NBS) said on Saturday.

But China’s monetary policy tightening should be gradual because consumer inflation is unlikely to exceed 5 percent in 2011, an academic adviser to the central bank said in remarks published on Monday.

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.