* China Oct implied crude demand up 10 pct on year
* Dollar edges down 0.5 pct against basket of currencies
* Iran war games aim to protect nuclear facilities
(Recasts, updates prices, adds details, previous dateline
PERTH)
By David Sheppard
LONDON, Nov 23 (Reuters) - Oil prices rose more than 1
percent to move above $78 a barrel on Monday due to weakness in
the dollar and signs of buoyant demand from China, the world's
second largest energy consumer.
China's implied oil demand in October was more than 10
percent higher than at the same time last year, customs data
showed on Monday, in the latest sign consumption is rising in
emerging economies despite the lingering impact of the economic
crisis. []
"Chinese demand is definitely supporting this market as
demand in the OECD (Organisation for Economic Co-operation and
Development) remains relatively weak," said Andrey Kryuchenkov,
analyst at VTB Capital in London.
U.S. crude for January delivery rose 98 cents to $78.45 a
barrel by 0949 GMT, after having to a day high of $78.52
earlier. London Brent crude <LCOc1> rose $1.08 to $78.28.
The rapid growth in oil demand from China played a large
role in pushing oil prices to a record peak of almost $150 a
barrel in July 2008, before the economic crisis slashed demand
for fuel around the world.
But the resilience of Chinese economic growth, which looks
poised to hit 8 percent in 2009, has helped oil prices more than
double since plumbing lows below $33 a barrel at the turn of the
year.
Dollar-priced commodities have also been boosted by a slump
in the U.S. currency, which has shed almost 25 cents against the
euro in a little over eight months.
Investors have been buying into commodities in a bid to hedge
against the dollar's weakness and to guard against concerns
ultra-easy monetary policy could lead to a jump in inflation as
the world's economy recovers. []
Gold <XAU=> soared to a fresh record high of $1,167.45 an
ounce on Monday as the dollar slipped towards $1.50 against the
euro. []
WAR GAMES
Analysts said Iran's large-scale air defence war games on
Sunday were also supportive for oil prices, as the world's
fourth largest crude exporter demonstrated its deterrence
capabilities in the face of pressure from the West over its
nuclear programme. []
"The rising Iran tensions, alongside U.S. dollar weakness
and gold's record high levels, have helped buoy oil prices,"
said Michelle Kwek, an analyst at Informa Global Markets in
Singapore.
A cleric in the Revolutionary Guards warned on Sunday Iran
would fire missiles at "the heart of Tel Aviv" if attacked.
[]
The threats came a day after senior officials from six world
powers said they were disappointed Iran had not accepted
proposals intended to delay its potential to make nuclear
weapons, with U.S. President Barack Obama warning there could be
a package of sanctions against Iran within weeks.
But analysts said oil price gains were likely to be limited
on the news, with the long-running tensions largely priced into
the market and oil trapped in a narrow trading band of $75-$82 a
barrel for the past month.
Barclays Capital said in a research note on Friday the
upside would also probably be capped by the Organization of the
Petroleum Exporting Countries (OPEC), which has indicated that
any quick run-up in prices is likely to be met by an active
approach to calm them.
Investors are set to scrutinise a raft of U.S. economic data
including existing home sales on Monday, revised GDP figures on
Tuesday and the minutes of Fed's last policy meeting the day
after, for signs of recovery in the world's top oil consumer.
The U.S. trading week will be shortened due to Thursday's
Thanksgiving Day holiday.
(Additional reporting by Fayen Wong in Perth; Editing by
Keiron Henderson)
((fayen.wong@thomsonreuters.com; +618 9456 1947; Reuters
Messaging: fayen.wong.reuters.com@reuters.net))
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