Oil hovers below $92, near 2-year high

I / New York January 13, 2011, 19:32 IST

Oil prices hovered below $92 a barrel today after signs of improving US demand and rising interest from financial investors pushed crude to a two-year high.

By early afternoon in Europe, benchmark oil for February delivery was down 12 cents to $91.74 a barrel in electronic trading on the New York Mercantile Exchange. Crude gained 75 cents to settle at $91.86 yesterday, the highest settlement price since October 2008..

The Energy Department said US commercial crude supplies fell by 2.2 million barrels to 333.1 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., expected a decline of only 300,000 barrels.

Crude inventories have fallen six straight weeks, suggesting US consumption is strengthening.

"Economic optimism, growing risk appetite and friendly equity markets are causing prices to rise," said a report from Commerzbank in Frankfurt. "The closeness to the psychologically important mark of $100 should additionally stir the interest of financial investors."

While the dollar slipped slightly against the euro today and in turn made crude cheaper for non-dollar investors, experts suggested factors outside the fundamentals of supply and demand could start to hamper oil prices.