* Freezing temperatures, weak dollar boost prices
* China may raise interest rates this weekend-paper
* Coming Up: U.S. API weekly oil stocks; 2130 GMT
(Recasts, adds detail, previous SINGAPORE)
By Emma Farge
LONDON, Dec 7 (Reuters) - Oil prices rose above $90 a barrel
for the first time in 26 months as the dollar fell and freezing
conditions in Europe and the United States stoked fuel demand.
Temperatures in Europe's main heating hub of northwest
Europe were expected to stay below seasonal norms over the next
10 days, according to private forecaster DTN Meteorlogix,
boosting gas oil demand and prompting utilities to switch on
oil-fired power plants. []
Heating demand in the United States was expected to be 16.3
percent above normal in the week to Dec. 11, according to the
U.S. National Weather Service. []
U.S. crude prices for January are on track to rise for the
fifth consecutive day and by 1029 GMT were up 80 cents at $90.18
a barrel. Prices earlier touched $90.37 a barrel, the highest
since October 2008.
ICE Brent <LCOc1> rose 76 cents to $92.21 a barrel by the
same time. []
"The market is reacting to the very cold weather in Europe
and it's expecting to see an impact on heating oil....it's a
knee-jerk reaction," said Roy Jordan, oil analyst at Facts
Global Energy.
The U.S. dollar index also fell by around 0.4 percent on
Tuesday in a move that also boosted oil prices since it makes
the dollar-denominated commodity more affordable for holders of
other currencies. <.DXY>
FALLING STOCKS?
As well as stoking demand, freezing temperatures could
tighten oil market fundamentals by draining U.S. inventories.
A preliminary Reuters poll of analysts showed that U.S.
crude oil stockpiles fell 1.5 million barrels last week and that
distillates used for heating dropped 400,000 barrels.
[]
The American Petroleum Institute will publish industry data
on inventories late on Tuesday, which will be followed by
government statistics from the Energy Information Administration
on Wednesday.
Earlier on Tuesday, oil prices traded flat after a Chinese
official newspaper report said that its central bank may raise
interest rates this weekend to enshrine its shift to a "prudent"
monetary policy in the face of rising inflation. []
A rate hike could temper the pace of energy demand growth in
the world's number two oil consumer.
"China is undoubtedly very influential on the market and we
have seen that the authorities are trying to ensure inflation is
under control and that growth is moderated," said Jordan.
Later on Tuesday, monthly German industrial sales data due
at 1100 GMT will offer an insight into the pace of demand growth
in Europe.
The Organization of the Petroleum Exporting Countries meets
on Dec. 11. Rather than raise output to curb prices, OPEC is
likely to roll over existing policy, ministers have said.
(Additional reporting by Alejandro Barbajosa in Singapore;
editing by William Hardy)
