London: Oil rose for a second day on Friday to trade close to $89 as Chinese crude imports rebounded, and the International Energy Agency raised its global oil demand forecast.
China’s central bank on Friday increased the amount of money lenders must keep on reserve for the third time in one month, a move to mop up excess cash in the economy and rein in inflation.
But oil kept rising after quickly slipping into negative territory in a repetition of a November scenario, when the market had expected China to raise rates but it only raised reserves requirements.
“People think even with the tightening of monetary policy in China there is still going to be high demand,” said Christopher Bellew, analyst at broker Bache Commodities, adding the cold weather in the Northern Hemisphere was also supporting prices.
US crude for January added 44 cents to $88.81 a barrel at 05:00 pm, after hitting a 26-month high of $90.76 on Tuesday. Prices were down slightly from a settlement above $89 last Friday. ICE Brent rose 40 cents to $91.39.
Imports by China, the world’s second-largest crude user, jumped 22.1% last month from a year earlier to 5.09 million barrels per day (bpd), the fourth highest monthly average on record, data showed on Friday.
“In terms of the dynamic of China, I believe the data, the policy and the road map for reform is suggesting further sustainable strong demand,” said Geoff Howie, sales and markets strategist at MF Global in Singapore. “We are still bullish. Asia is driving the price higher.”
The IEA, an adviser to 28 industrialised countries, said in a monthly report world oil demand will be higher than expected next year and until 2015, increasing the need for crude from the OPEC producer group.
It lifted its 2011 oil demand growth forecast by 130,000 barrels per day (bpd) to 1.32 million bpd.
The Organization of the Petroleum Exporting Countries (OPEC) said it wanted an improvement in oil market fundamentals before increasing crude supplies, even if prices go to $100 a barrel.
“If it goes to $100 due to speculation, OPEC will not move,” OPEC secretary general Abdullah al-Badri said in Quito, Ecuador, where the group will meet on Saturday.
China’s November crude imports rose 31.9% from the 19-month low of 3.86 million bpd in October, a Reuters calculation showed, as oil firms stepped up shipments to support high refinery crude throughput amid widespread diesel shortages.