* Coming Up: U.S. ISM survey at 1500 GMT
* U.S. and Brent futures reach highest since October 2008
* U.S. oil in contango structure, suggests ample supply
(Updates prices paras 2-4, adds Europe, Asian data para 8)
By Barbara Lewis
LONDON, Jan 3 (Reuters) - Oil extended a rally above $92 a
barrel on Monday, spurred by expectations economic recovery will
fuel energy demand and as market bulls set their sights on $100
a barrel.
U.S. crude <CLc1> was trading 70 cents higher at $92.08 a
barrel by 1325 GMT, off a session high of $92.30, its highest
since October 2008.
It settled at $91.38 on Friday, marking an annual gain of
around 15 percent and the highest year-end price since 2007 when
the market had embarked on its ascent to the all-time high of
nearly $150 a barrel touched in July 2008.
Brent <LCOc1> was up 97 cents a barrel at $95.72, off an
intraday peak of $96.07, also the highest since early October
2008.
Trade was thinned by a public holiday in the United Kingdom
but could take direction later on Monday from a survey by the
Institute for Supply Management (ISM) -- a measure of U.S.
national factory activity.
It was expected to show a slight expansion in the
manufacturing sector, reinforcing the view the economy in the
world's largest oil consumer is strengthening, which could drive
up energy demand. []
"Traders will be looking at the string of U.S. economic
numbers coming out this week to see if they can sustain the
strong price moves in December. Overall, we expect the market to
be well bid. How bid? Well, it depends on the data," said Geoff
Howie, markets strategist at MF Global in Singapore.
Data for Asia and Europe showed factory growth eased
slightly in Asia in December, while export orders picked up in
Europe. []
BROADER RALLY
Commodities as a whole embarked on a compelling rally in
September. It continued throughout the final months of last
year, driven by expectations of quantitative easing and a
weakened U.S. dollar, which tends to boost dollar-denominated
commodities.
The dollar rose against a basket of currencies on Monday,
partly offsetting the bullish implications for the oil market of
a possible economic recovery in the United States. []
The Organization of the Petroleum Exporting Countries helped
to stoke bullish sentiment by saying the market was still well
supplied and that it would not implement any formal change in
output unless it saw a convincing shift in the balance of supply
and demand. []
Some analysts agreed the rally was speculative.
"It does not make sense on a fundamental basis," said
Olivier Jakob of Petromatrix. "The structure of the market is
telling a different story from the flat price."
U.S. crude futures have been stuck in a stubborn contango,
whereby prompt oil is cheaper than that for later delivery, a
market condition that encourages storage.
Traders, however, said there was momentum to move higher as
new money was expected to enter the market at the start of the
year and that in the short term there was little choice but to
follow it.
"The answer is to go with it or you'll lose money," said one
trader who could not be named.
Prices could still falter before the next move higher,
possibly correcting to $83.85 per barrel, based on a wave
pattern and a channel technique, according to Wang Tao, Reuters
market analyst for commodities and energy technicals.
[]
(Additional reporting by Jennifer Tan in Singapore, editing
by William Hardy)
