* U.S. crude hovers below 26-month high
* Heating oil demand, weaker dollar support prices
* OPEC has no plans to change policy for now
(Updates prices)
By Barbara Lewis
LONDON, Dec 28 (Reuters) - Oil markets rose on Tuesday to
hover just below a 26-month high struck the previous session
after a blizzard on the U.S. East Coast boosted demand for
heating oil.
U.S. crude for February <CLc1> was 31 cents higher at $91.31
a barrel by 1305 GMT. It had reached a peak of $91.88 on Monday
-- the highest since October 2008.
ICE Brent crude <LCOc1> traded 19 cents higher at $94.04.
A weaker U.S. dollar also provided support, although traders
said markets were distorted by thin volumes in end-of-year
holiday trade. []
In addition to temporary weather effects, the oil bulls
pointed to a series of positive economic figures that could
stimulate fuel demand.
"Data in recent weeks have been supportive of the stocks and
commodity markets globally. The U.S. will avoid a double-dip.
The Asian region including Japan looks a little bit better, with
its industrial production finally showing an increase," said
David Cohen, director of Asian Economic Forecasting at Action
Economics.
"I think a lot of people are expecting prices to turn higher
towards $100 a barrel next year."
The Organization of Arab Petroleum Exporting Countries, some
of whose members also belong to OPEC, met in Cairo at the
weekend, when leading exporter Saudi Arabia reiterated its
preference for a $70-$80 price range. Others said $100 would be
fair and the global economy could withstand it. []
From a low struck in May, oil has rallied by 35 percent, and
the market is roughly 15 percent higher than at the end of 2009.
A rally across financial markets took hold in earnest around
September, spurred by the latest waves of U.S. quantitative
easing and a weakened dollar that can support dollar-denominated
commodities.
The dollar sagged against a basket of currencies on Tuesday
<.DXY>, while the Chinese yuan rose after China announced a rate
rise at the weekend as the world's second-largest oil burner
strives to slow down its economy. []
INFLATION?
For oil-consuming countries, the sustained commodities rally
has raised concerns of inflation, but OPEC ministers have said a
change in output policy would only be justified if there were a
significant shift in fundamentals of supply and demand as
opposed to a speculative price rally.
The latest data from the U.S. Commodity Futures Trading
Commission on Monday showed money managers had extended their
net long crude oil positions to a record high. []
The latest indications of fundamentals of supply and demand
for the United States, the world's biggest oil burner, will not
be released until Wednesday and Thursday. Figures published last
week showed a big drop in crude inventories, although they were
still higher than a year ago. []
Heating oil demand has been stoked in Europe and the United
States by unusually cold weather, although some drivers have
kept off the roads, lowering gasoline use.
Temperatures in the U.S. Northeast, the world's biggest
heating oil market, were expected to return to near normal on
Wednesday after a major snowstorm caused chaos over the first
part of the week. [] []
(Additional reporting by Seng Li Peng in Singapore, editing
by Jane Baird)
