Oil stays above $89 on hopes for better economy (Reuters) (24-01-2011)

SINGAPORE – U.S. crude was above $89 on Monday on hopes that developed economies are recovering and will support demand for commodities.

U.S. crude oil for March delivery rose 35 cents to $89.46 a barrel at 2:31 a.m. ET, after posting a 2.65 percent loss last week. ICE Brent crude for March rose 36 cents to $97.96 a barrel.

Oil demand is expected to rise between 1.5 million and 1.8 million barrels per day this year, a more bullish forecast than those from OPEC and the International Energy Agency.

Saudi Arabia is about to hold 4 million barrels per day of spare crude oil capacity in 2011 and according to the IEA last week, the OPEC leader Saudi Arabia had stealthily boosted output to cool an oil price rally.

ICE Brent's premium to U.S. benchmark West Texas Intermediate crude reached $8.59 intraday on Friday; it’s highest since February 2009, on tight North Sea crude supplies and strong emerging market demand.

U.S. crude demand is ready to fall with the onset of a peak refinery maintenance season, Peter Beutel, president of U.S. trading advisory firm Cameron Hanover, said in a note late Friday.

Source: Reuters