* Libya's Ghanem says $100 a barrel would be a fair price
* Cold weather in U.S., Europe boosts demand
* Crude up more than 30 pct from 2010 low
* Prices not affecting economic growth yet
(Updates with OPEC, prices, analysts)
By Barbara Lewis and Dmitry Zhdannikov
LONDON, Dec 23 (Reuters) - Oil prices held above $90 a
barrel on Thursday, close to their highest in two years, as cold
weather boosted demand and U.S. stockpiles shrank while OPEC
members and analysts said prices could soon rise to $100.
"I think current oil prices are reflecting the situation in
the market which is a well-balanced market," the head of Libya's
National Oil Corporation Shokri Ghanem, one of OPEC's most
hawkish members with regards to the oil price, said on Thursday.
"It's fair to say it's about right, but still I think that
it needs to improve a little bit more. About $100 would be a
fair price for the time being," Ghanem told Reuters in Cairo
ahead of a meeting of Arab oil exporting countries.
Unusually cold weather in the United States and Europe has
helped to spur the latest leg of a more than 30 percent rally
from a year-low struck in May.
U.S. crude for February <CLc1> was largely flat at $90.52 a
barrel by 1434 GMT, after settling at the highest level since
October 2008 on Wednesday, just off a session peak of $90.80.
ICE Brent crude <LCOc1> traded also flat at $93.65.
"With OPEC set to be reactive rather than proactive, the
route to $100 appears fairly unobstructed at this time," said
analysts at Barclays Capital.
Wednesday's strong settlement followed U.S. inventory data
showing a big drop in crude stocks, although analysts said there
could be an element of distortion because of a year-end draw
down for tax purposes.
"In the (U.S. inventory) report per se there was nothing
apart from a normal seasonal draw-down," said Olivier Jakob of
Petromatrix.
"The market is currently only interested in a technical
attack of the recent highs," he said, adding prices could also
be exaggerated by thin trade over the holiday period.
Patrick Armstrong of London-based Armstrong Investment
Managers said the price could go for $100 because funds were
allocating more money to commodities to preserve the real value
of investment portfolios.
"But I don't think we're going to see scenarios for
spikes... I think we are going to see more production because
oil is above $90," he said referring to OPEC.
The group has said it would hold no formal meetings before
June and was keen to see prices driven by fundamentals rather
than speculators before it raised output.
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Graphic on crude oil price rally:
http://link.reuters.com/jaw43r
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Stockpiles in the world's top oil user have fallen by 19
million barrels since Nov. 26, roughly equivalent to one day of
U.S. fuel consumption and the biggest three-week drop since
1998. [] Demand has been stoked by sub-normal temperatures,
which are expected to continue.
IS $100/OIL DAMAGING RECOVERY?
Forecaster AccuWeather.com expects temperatures in the U.S.
Northeast, the world's top heating oil market, to average mostly
below normal for the next week, while U.S. heating oil demand
was expected to average 4.6 percent above normal this week.
In Europe, Russian oil supplies to Germany and Poland were
reduced because of a fire on a pipeline running via Belarus, in
a development likely to remind markets of previous supply cuts
after pricing rows between Moscow and Minsk. []
After a contraction in demand following global economic
recession, fuel use has begun to rebound and is expected to
continue growing next year taking absolute oil consumption to an
all-time high, although the rate of growth will still be lower
than a peak hit in 2004. []
Some analysts consider the world could tolerate higher
price, especially as waves of quantitative easing have helped to
weaken the dollar, making dollar-denominated commodities, such
as oil relatively cheap <.DXY> <EUR=>
Serene Lim, an oil analyst at ANZ, saw scope for the rally
to continue before it squeezed the economy.
"Oil prices anywhere above $110 will start to eat into
economic growth," Lim said.
(Additional reporting by Randolph Fabi and Seng Li Peng in
Singapore; editing by James Jukwey)
