Oil surged above $91 a barrel to its highest price in more than two years on Thursday, as Opec member Libya's apparent lack of concern over prices prompted some analysts to call for a new year's run at $100. With crude reaching back-to-back 26-month highs, ultra-cold weather stoking demand and depleting US stockpiles at the fastest pace in 12 years, traders are now looking for the Organisation of the Petroleum Exporting Countries to signal when it might begin pumping more crude.
But Libya's top oil official, one of Opec's most hawkish members toward oil prices, appeared unconcerned by the gains, which have lifted prices more than 20 percent in three months as fundamentals turn more positive and investors factor in an improving economic outlook for next year.
"It's fair to say it (the price) is about right, but still I think that it needs to improve a little bit more. About $100 would be a fair price for the time being," Libya's National Oil Corp Chairman Shokri Ghanem told Reuters in Cairo ahead of a meeting of Arab oil exporting countries.
US crude for February rose $1.03 to settle at $91.51 a barrel, the highest price since October 7, 2008 when oil prices were crashing from their $147 record as the world's financial industry reeled and investors fled risky assets. Prices hit an intraday peak of $91.63 a barrel. ICE Brent crude settled at $94.25, up 60 cents from Wednesday after a midsession burst of gains triggered by buy-stops and as the dollar fell.
Although some said low trading volume on the last day before Christmas likely exaggerated gains, few expected to see a correction as traders looked forward to a fresh infusion of institutional investment in the booming commodities sector. US crude traded about 220,000 contracts, one-third the norm. So far economic news is supporting the gains too. Data on Thursday showed new US claims for jobless benefits dipped last week and consumer spending increased in November for a fifth straight month, reinforcing views of a solid economic growth pace in the fourth quarter.
And while gasoline prices now back above $3 a gallon could begin to erode spending in the still fragile US economy, the fact that they remain far below their $4 peak two years ago suggests they will not pack the same psychological punch. Nearly three years after oil first traded at $100, demand is again rising swiftly, but one key factor has changed significantly. Unlike the start of 2008, when Opec was already pumping flat out, the group now has a sizeable amount of idle capacity it could use to douse the rally - if it chooses.
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