* Coming Up: ECB rate decision due at 1245 GMT
* Analysts warn investors could be disappointed by ECB
* China official signals monetary tightening next year
* Technicals: oil retracing to $85.65/bbl []
(Updates prices, adds quotes, pvs SINGAPORE)
By Zaida Espana
LONDON, Dec 2 (Reuters) - Oil prices inched up on Thursday,
close to three-week highs of $87, as financial markets were
supported by expectations the European Central Bank might unveil
measures to contain the euro zone debt crisis.
Front-month oil prices were 10 cents up at $86.85 a barrel
by 1016 GMT, after encouraging private jobs data in top consumer
the United States lifted prices by 3 percent in the previous
session.
ICE Brent <LCOc1> futures added 28 cents to $89.15.
Focus was on the European Central Bank's monthly meeting,
which is expected to keep unlimited liquidity operations in
place for longer to support euro zone members grappling with
debt problems, but is unlikely to announce new mass bond
purchases. []
European bourses rose ahead of the ECB announcement, while
the euro was broadly unchanged, having jumped by more than 1
percent on Wednesday.
Rising unemployment figures in Spain were a timely reminder
of the challenges that some euro zone members face, with jobless
numbers going up in November for the fourth consecutive month;
although jobless data from Denmark and France was broadly
unchanged. [] [] []
"The European crisis is yet another source of concern for
us, as we do not think that -- even if new proposals are put
forward -- consensus will be so easily attained," MF Global
senior analyst Edward Meir said in a note, adding that the
prospect of inflation-fighting measures in Asia was another
concern.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic on ECB bond purchases and peripheral spreads
http://graphics.thomsonreuters.com/F/11/EZ_ECBB1110.jpg
For a graphic on euro zone gov deficits and debt in 2011
http://graphics.thomsonreuters.com/F/09/EUROZONE_REPORT2.html
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Oil prices fell earlier in the session after a Chinese
central bank adviser said that the country's monetary policy
will tighten steadily next year to counter inflation and
excessive global liquidity. []
"While we are still wary about going long a number of
commodity complexes at these levels, the markets clearly feel
otherwise, buoyed by the positive macro data that has been
streaming out over the last two days," Meir said.
"For the time being, participants seem to be unconcerned by
the consequences of these strong macro reports, namely, that
central banks, particularly in Asia, will have to step up the
pace of tightening in order to stave off inflationary
pressures".
PRICE OUTLOOK
Oil prices are currently less than $2 away from a 25-month
peak of $88.63 reached on Nov. 11.
"We seem to be close to the top of the trading range, so we
will need something to push it through $90 and cold weather may
not be enough," Christopher Bellew from Bache Commodities said.
Investment bank Goldman Sachs said U.S. crude prices are
likely to average $100 a barrel in 2011 and $110 a barrel in
2012 on the back of a "new structural bull market".
[]
"We expect in 2011 and 2012 that the transition from a
cyclical recovery to a new structural bull market will lead to
new record annual average prices above the 2008 high of just
under of $100 a barrel," Goldman said in a Dec. 1 report.
On Wednesday, U.S. crude oil inventories data from the
Energy Information Administration showed weekly a surprise gain
of 1.1 million barrels. []
"The latest data from the U.S. showed that oil inventories
actually rose amid weakening consumption. This could pose a
risk for prices and limit the upside potential in the coming
days, despite the general improvement in market sentiment,"
Singapore-based Credit Suisse analyst Stefan Graber said.
U.S. gasoline stockpiles rose in line with forecasts last
week; while a weekly 937,000 barrel drop in East Coast gasoline
stocks lifted gasoline futures to an almost seven-month high on
Wednesday.
MORE DATA AWAITED
U.S. private sector payrolls rose by the most in three
years in November, lifting optimism about the job market ahead
of Thursday's weekly initial jobs claims reports and Friday's
monthly government employment report. []
U.S. non farm payrolls are likely increased for a second
straight month in November, up 140,000, a Reuters poll showed.
The gain would point to an acceleration in economic activity and
a recovery that is becoming self-sustaining. []
(Additional reporting by Alejandro Barbajosa in Singapore;
editing by Alison Birrane)
