Oil close to a 27-month high (Reuters) (04-01-2011)

SINGAPORE – Oil was near the highest price levels in more than two years, as accelerating manufacturing activity in industrialized economies and winter weather fanned expectations that U.S. crude inventories will continue to drain.

U.S. crude for February fell 12 cents to $91.43 a barrel at 0721 GMT (2:21 a.m. ET), about a dollar below Monday's peak of $92.58, the highest intraday price since early October 2008.

ICE Brent was unchanged at $94.84, having topped $96 on Monday for the first time since 2008.

Crude oil inventories in the United States, the world's top consumer, probably fell for the fifth-straight time last week, down by 1.7 million barrels, according to Reuters.

Industry group American Petroleum Institute (API) will release its inventory report on Tuesday at 2130 GMT, while the U.S. Energy Information Administration will follow with government statistics at 1530 GMT on Wednesday.

U.S. stockpiles of gasoline and distillates including heating oil and diesel probably increased in the week ending December 31 while earlier on Tuesday prices slipped as much as 27 cents on expectations that fuel demand will ease after the approaching peak of the Northern Hemisphere heating season.

Distillate stocks were projected to have gained 300,000 barrels on average as overall demand was unchanged, the poll showed, while gasoline inventories were also forecast to have added 300,000 barrels.

Manufacturing in the United States and Europe accelerated in December, while growth in China and India slowed to more sustainable levels in another boost for the global economic outlook.

U.S. crude futures remain in a stubborn contango, a price structure where prompt oil is cheaper than barrels for later delivery. This market condition encourages storage.

Source: Reuters