Abu Dhabi: Global oil prices shot above $87 (Dh319) a barrel Wednesday as Chinese manufacturing expanded at the fastest pace in seven months in November and there were indications the US oil stockpiles may have actually declined.
Investors will be looking to the US Energy Information Administration's weekly supply report for confirmation of the inventory changes.
"Oil is getting its direction from the financial markets rather than oil market fundamentals of supply and demand. People are looking at Asia, rather than OECD [Organisation for Economic Cooperation and Development] countries for direction," Kate Dourian, Middle East Editor for Platts, a global energy information provider, told Gulf News by telephone from Doha.
The burgeoning demand for oil products from China and India have supported oil prices as the world economy grapples to come out of a long slump.
Oil sales in the US, the world's largest importer of crude oil, have stagnated in the last two years as the global financial crisis crimped its economic growth and consumer spending.
January contract
The January contract rose as much as $1.42 to $85.53 a barrel on the New York Mercantile Exchange and was at $85.49 a barrel at 12:30pm London time.
Brent crude for January settlement rose as much as $1.49, or 1.7 per cent, to $87.41 a barrel on the ICE Futures Europe exchange in London.
Oil prices slumped 1.9 per cent on Tuesday as concern mounted that Europe's debt problems are spreading to countries including Spain, Portugal and Italy.
It was the biggest one-day decline since November 17. The European Union approved an 85 billion euro rescue package for Ireland on Sunday. The crisis has depressed the euro against the dollar, limiting the appeal of commodities priced in the US currency.
Market experts expect oil prices to hold at current levels in the near-term as the demand from the OECD remains flat.
Oil prices are comfortable for producers and consumers at current levels, Organisation of Petroleum Exporting Countries' (Opec) Secretary General Abdullah Al Badri said last month.
Opec has kept its oil output target unchanged for almost two years since announcing a record output cut to support prices.
Some of its oil ministers have predicted Opec will do the same when it meets next Saturday in Quito, Ecuador.
"Oil above $80 a barrel is adequate to support GCC economies in their economic growth ambitions," commented Tudon Allen, strategist with Dubai-based brokerage Alembic HC.
