* China industrial output tops forecasts, helps lift oil
* OPEC leaves output targets steady at Saturday meeting
* Coming up: API oil inventory data, 4:30 p.m. EST Tuesday
(Updates with oil inventory forecast paragraphs 19-21)
By Robert Gibbons
NEW YORK, Dec 13 (Reuters) - Oil prices rose on Monday,
surging early with commodities lifted by strong Chinese
economic data before oil met resistance above $89 a barrel amid
investor concern that China may yet take more action to cool
its inflation.
Saudi Arabia said it still favored oil prices between $70
and $80 per barrel, stoking investor caution even as the
Organization of the Petroleum Exporting Countries on Saturday
kept production policy unchanged as expected, despite oil's
recent rise above $90 a barrel.
U.S. crude for January delivery <CLc1> rose 82 cents to
settle at $88.61 a barrel, after posting a session peak of
$89.49. U.S. crude hit a 26-month peak at $90.76 on Dec. 7.
"Thursday's high was $89.42, so the market is showing there
is decent resistance in that area," said Tom Bentz, broker at
BNP Paribas Commodity Futures Inc in New York.
Total U.S. crude trading volume was at 579,373 lots, below
the 30-day average of 667,478 lots with about 1-1/2 hour of
post-settlement trading left.
ICE Brent crude for January <LCOc1> rose 71 cents to settle
at $91.19 a barrel, off an early $92.30 peak. The January Brent
contract expires on Thursday.
Investor optimism was fueled by data from China's National
Bureau of Statistics showing industrial output in November
topped expectations, while headline inflation rose to a
28-month high to 5.1 percent.
Investors worry that soaring inflation will prompt China to
take additional measures to cool its economy on top of recent
hikes to lender reserve requirements. Restraining the economy
that is the key source of oil demand growth could limit oil
prices.
But China's implied oil demand in November rose 13.7
percent from the year-ago period to a record of nearly 9.3
million barrels per day, Reuters calculations based on
preliminary official data showed. []
"Over the weekend the Saudis came out and said $70 to $80
is optimal," said Stephen Schork, president at the Schork
Group, commenting on investor caution when prices near $90.
"And given the weekend's news regarding China's rampant
inflation, my assumption is they will move to lower
consumption, and that is all weighing upon the market," he
said.
OPEC OUTPUT TARGETS UNCHANGED
OPEC's top producer Saudi Arabia said on Saturday it still
favored a $70-$80 oil price range as OPEC left its production
targets unchanged at an oil ministers' meeting in Quito.
Saudi Oil Minister Ali al-Naimi told reporters on Saturday
that, "$70-$80 is a good price," seemingly restating a
two-year-old policy. []
Naimi had said on Nov. 1 that oil at between $70 and $90
was comfortable for consumers. [] Venezuela and
Libya have since said that $100 a barrel is needed to
compensate for a weak dollar and to maintain investment.
DOLLAR WEAKENS
The dollar's weakness also was supportive to oil prices as
the concerns about the U.S. deficit pushed the dollar lower
after rating agency Moody's said a tax-cut deal reached last
week by the White House and Republicans could shift its outlook
on the United States' top credit rating. []
A weaker dollar can lift dollar-denominated commodities
prices as it lowers the value of greenbacks paid to producers
and attracts investment to better yields in commodities
markets.
NOT QUITE AS COLD
U.S. heating oil futures <HOc1> managed to end higher on
Monday after also seesawing. While heating oil demand will
average 4.8 percent above normal this week, according to the
National Weather Service, that is well below last week when
demand was 23.7 percent above normal. []
Northern Europe remains cold, with forecasts expecting them
to remain below normal. []
OIL INVENTORIES
U.S. crude oil inventories were expected to have fallen
last week, according to a Reuters survey of analysts on Monday.
Crude stocks were estimated to be lower by 2.2 million barrels,
with distillate stockpiles seen down 500,000 barrels. []
Gasoline stockpiles were expected to be up 1.8 million
barrels.
The American Petroleum Institute's inventory report is due
on Tuesday at 4:30 p.m. EST (2130 GMT), with the U.S. Energy
Information Administration's report following on Wednesday.
(Additional reporting by Gene Ramos in New York, Una Galani
and Christopher Johnson in London and Rebekah Kebede in Perth;
Editing by Marguerita Choy)
