* ECB rate at 1245 GMT, Trichet press conference at 1330 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)
By Zaida Espana
LONDON, Dec 2 (Reuters) - Oil prices were steady on
Thursday, hovering near three-week highs of $87, as expectations
the European Central Bank might unveil measures to contain the
euro zone debt crisis lifted financial markets across the board.
Front-month U.S. crude oil prices <CLc1> were 5 cents up at
$86.80 a barrel by 1238 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 increased 36 cents to $89.23.
The European Central Bank's monthly meeting remained centre
stage on hopes it will keep unlimited liquidity operations in
place for longer to support euro zone members grappling with
debt problems, although it is unlikely to announce new mass bond
purchases. []
"Attention is mainly on macro economic factors: what is
happening in Europe and what the ECB can do," Credit Agricole
CIB's analyst Christophe Barret said.
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 in Denmark and France was broadly
unchanged. [] [] []
"Right now oil market fundamentals are irrelevant with
broader financial market developments taking the lead on
short-term direction," Standard Bank analysts said.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
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
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Still on the macro front, 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," MF GLobal analyst Edward
Meir said, referring to Wednesday's positive job data from the
United States.
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. []
"This creates hope that oil demand in the world's biggest
oil consuming country will also pick up further," Commerzbank
anaysts said in a report.
"For the first time in days, tailwind is coming again from a
weaker dollar. The outbreak of cold weather in many parts of
Europe should also boost the demand for heating and contribute
to stock reduction".
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.
(Additional reporting by Alejandro Barbajosa in Singapore;
editing by Keiron Henderson)
