* 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
(Recasts, updates throughout)
By Barbara Lewis and Jonathan Leff
NEW YORK/LONDON, Dec 23 (Reuters) - Oil shot to a more than
two-year high for a second day in a row on Thursday, and some
analysts said a run at $100 a barrel is inevitable, as one key
OPEC member expressed little alarm over the rally.
With ultra-cold weather stoking demand and helping drain
U.S. stockpiles at the fastest pace in 12 years, traders are
now looking for the Organization of the Petroleum Exporting
Countries to signal when it might begin pumping more crude.
But Libya's top oil official, one of OPEC's most hawkish
members toward oil prices, appeared unconcerned by the gains
which have lifted prices more than 20 percent in three months
as fundamentals turn more positive and investors factor in an
improving economic outlook for next year.
"It's fair to say it (the price) is 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," Libya's National Oil
Corp Chairman Shokri Ghanem told Reuters in Cairo ahead of a
meeting of Arab oil exporting countries.
"I think current oil prices are reflecting the situation in
the market which is a well-balanced market," he said.
U.S. crude for February <CLc1> rose 62 cents to $91.10 a
barrel by 11:37 EST (1637 GMT), the highest price since Oct. 7
when oil prices were crashing from their $147 record as the
world's financial industry reeled and investors fled risky
assets.
ICE Brent crude <LCOc1> rose 47 cents to $94.12, with a
midsession burst of gains triggered by buy-stops after prices
broke above Wednesday's high and as the dollar fell.
Nearly three years after oil first traded at $100, demand
is again rising swiftly, but one key factor has changed
significantly. Unlike the start of 2008, when OPEC was already
pumping flat out, the group now has a sizeable amount of idle
capacity it could use to douse the rally -- if it chooses.
A series of comments in recent months suggest the cartel is
now ready to tolerate a price higher than the $70-to-$80 band
it has publicly supported for the past two years, and analysts
say that means it may wait too long before pumping more oil.
"With OPEC set to be reactive rather than proactive, the
route to $100 appears fairly unobstructed at this time," said
analysts at Barclays Capital.
Oil traders will be looking for comments this weekend from
other core Gulf OPEC ministers to see if they are more
concerned than they were two weeks ago when the group decided
at its meeting in Quito, Ecuador, to maintain supply quotas.
The meeting of the Organization of Arab Petroleum Exporting
Countries (OAPEC) in Cairo will not set policy, and OPEC's next
formal meeting is not scheduled until June.
But some analysts say they expect the group to quietly lift
output prior to that by leaking more beyond quotas.
"I think we are going to see more production because oil is
above $90," said Patrick Armstrong of London-based Armstrong
Investment Managers. "But I don't think we're going to see
scenarios for spikes."
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Graphic on prices: http://link.reuters.com/jaw43r
PREVIEW of Cairo meeting: []
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FASTEST DRAW IN THE WEST
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.
Brightening prospects for next year are also fuelling the
market. Data on Thursday showed new U.S. claims for jobless
benefits dipped last week and consumer spending increased in
November for a fifth straight month, reinforcing views of a
solid economic growth pace in the fourth quarter.
[]
After a contraction in demand following the 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. But the rate of growth will still be lower
than a peak hit in 2004. []
Gains this week have been fuelled as much by momentum
trading in a thinner holiday period as by improving
fundamentals, including another big weekly draw in U.S. crude
stocks. Inventories have now fallen 19 million barrels in three
weeks -- the biggest decline since 1998.
"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.
(Additional reporting by Randolph Fabi and Seng Li Peng in
Singapore; editing by James Jukwey and Jim Marshall)
