* UK adds to strong manufacturing data around the world
* Natural disasters spur commodities rally
* Coming Up: API weekly oil inventory report; 2130 GMT
(Adds commen4s, updates prices)
By Alejandro Barbajosa and Dmitry Zhdannikov
SINGAPORE/LONDON, Jan 4 (Reuters) - Oil hovered near the
highest price levels in more than two years on accelerating
manufacturing activity in developed economies and expectations
that U.S. crude inventories will continue to drain.
U.S. crude for February <CLc1> rose 35 cents to $91.90 a
barrel at 1050 GMT after hitting a 27-month peak of $92.58, the
highest intraday price since early October 2008.
ICE Brent <LCOc1> was up 64 cents at $95.47, having topped
$96 on Monday for the first time since 2008.
"Oil sentiment has turned decidedly bullish, partly driven
by unusually cold weather, but more due to an increasingly
optimistic consensus view on 2011 economic performance,
especially for the U.S.," JPMorgan analysts led by Lawrence
Eagles said.
Prices rallied on Monday on accelerating manufacturing
activity in industrialised economies and icy weather.
Manufacturing in the United States and Europe accelerated in
December, while growth in China and India slowed to more
sustainable levels in another boost for the global economic
outlook. []
On Tuesday, a report showed that British manufacturing
activity expanded at its fastest pace in over 16 years in
December, above expectations. []
"It appears easily possible that the magical three-digit
threshold ($100 per barrel) falls in the coming weeks," analysts
at JBC Energy broker said on Tuesday.
"The wildcard of natural and man-made disasters steadily
adds twists to commodity markets," it added, citing an
earthquake in Chile and floods in Columbia and Australia as
contributing to a global commodities rally. []
U.S. INVENTORIES
Crude oil inventories in the United States, the world's top
consumer, probably fell for the fifth-straight time last week,
down by 1.7 million barrels, a Reuters poll showed [],
while stockpiles of gasoline and distillates probably rose.
Refiners continued to use up more of their stored crude
supplies while holding off on imports to lower their year-end
taxes, analysts said.
Industry group American Petroleum Institute (API) will
release its inventory report on Tuesday at 2130 GMT, while the
U.S. Energy Information Administration will follow with
government statistics at 1530 GMT on Wednesday.
"Increasing demand for heating oil is helping to reduce the
inventory overhang," said Credit Suisse analysts including
Stefan Graber.
"However, this is likely to be temporary as heating oil
demand usually peaks around mid-January. While the short-term
technical trend and momentum indicators remain positive, we
think that ample OPEC spare production capacity is likely to cap
the upside."
U.S. crude futures remain in a stubborn contango, a price
structure where prompt oil is cheaper than barrels for later
delivery. This market condition encourages storage.
The spread between front-month February and March crude
futures <CL-1=R> had the premium for March crude at almost $1 on
Tuesday.
In other markets, world stocks as measured by MSCI
<.MIWD00000PUS> were up nearly half a percent on the day, with
the emerging market sub-index <.MSCIEF> gaining 0.4 percent
lifted by the optimism about the state of the world economy.
[]
The next big test for the U.S. economy comes on Fri$ay when
the government will publish its December jobs report.
(Editing by Alison Birrane)
