* Renewed confidence in economic recovery lifts oil
* Saudi oil min expects stronger global oil demand
* Goldman sees "structural bull market" returning
* Brent at highest premium to U.S. crude since Feb 2009
(Updates prices)
By Alex Lawler
LONDON, Jan 24 (Reuters) - Oil prices fell on Monday, with
Brent crude falling towards $97 a barrel and U.S. crude sliding
below $88, as dealers focused on weaker equity markets and
rising U.S. oil inventories.
Brent crude for March <LCOc1> was down 30 cents to $97.30 a
barrel by 1449 GMT. It reached $99.20 on Jan. 14, the highest
since October 2008. U.S. crude for March <CLc1> lost $1.27 to
$87.84.
"The dollar strengthened and the stock market looks a little
tired so this looks like crude testing support after last week's
losses and the inventory builds," said Gene McGillian, analyst
at Tradition Energy in Stamford, Connecticut.
Earlier in the session, Brent rose to above $98 on renewed
confidence that developed economies are recovering and as Saudi
Arabia's oil minister predicted strong oil demand in 2011.
The Saudi minister, Ali al-Naimi, said he expected global
oil demand to rise between 1.5 million and 1.8 million barrels
per day (bpd) this year -- more than forecast by the
International Energy Agency. [] []
Brent's premium to U.S. crude, also known as West Texas
Intermediate or WTI, <CL-LCO1=R> reached $9.71 on Monday, its
highest since February 2009, on tight North Sea supplies and
strong emerging market demand.
"There are bearish factors on the WTI side and bullish
factors on the Brent side," said Mike Wittner, analyst at
Societe Generale. "Put the two together and you have the basis
for a wide spread."
High inventories at Cushing, Oklahoma, the delivery point
for U.S. futures contracts, have depressed U.S. crude, while
North Sea production glitches have helped to bolster Brent.
[]
GOLDMAN SEES BULL MARKET
Saudi Arabia is by far the largest oil producer in the
Organization of the Petroleum Exporting Countries and holder of
the bulk of the world's unused oil production capacity.
Speaking at an industry conference, Naimi declined to say
whether Saudi Arabia's production was in line with its OPEC
target of 8.05 million bpd.
The IEA said in a report last week that the OPEC leader was
making more crude available to the market. []
Naimi said Saudi Arabia was set to hold about 4 million bpd
of spare crude oil capacity in 2011. The kingdom has capacity of
12 million bpd, or 12.5 million bpd including the neutral zone.
Oil is still a long way from the record high of $147 a
barrel it reached in 2008 and while analysts do not expect that
to be revisited any time soon, some prominent voices see the
rally running further.
Goldman Sachs said it believed a "structural bull market"
would return to the oil market as OPEC used more of its idle
capacity to meet demand.
"As OPEC spare capacity is drawn down, we expect a
structural bull market to return to the oil market, with
substantially higher prices," Goldman said in a report on
Monday.
(Reporting by Alex Lawler, Robert Gibbons and Florence Tan;
editing by William Hardy and James Jukwey)
