* Optimism bubbles over global recovery momentum
* Average oil prices to gain 8 percent in 2011 -analysts
* U.S. econ data to set tone, offer price support
* Coming Up: US Dec manufacturing data
(Adds details of poll on oil's outlook, updates prices)
By Jennifer Tan
SINGAPORE, Jan 3 (Reuters) - Oil extended its rally above
$91 a barrel on Monday on optimism the global economic
rebound is gathering momentum, which could drive demand growth
and send prices above $100 later this year.
Traders will scour U.S. December manufacturing survey
data, initial claims for jobless benefits and December
employment figures, due later this week, for more clues on the
pace of recovery in the world's top energy consumer.
Upbeat U.S. data on jobless claims and regional
manufacturing activity last week had already buoyed
expectations the economy had gained a firmer footing as the
year ended, and was on track for a stronger performance in
2011. []
U.S. crude for February delivery <CLc1> rose 40 cents to
$91.78 a barrel by 0715 GMT in holiday-thinned trade, after
settling up $1.54 a barrel at a 2010 high of $91.38 a barrel
on Friday. That marked the largest end-year price since 2007.
London Brent <LCOc1> was up 33 cents to $95.08 a barrel,
after rising $1.66 on Friday to settle at $94.75 a barrel, its
highest end-December settlement since 2007 and up nearly 22
percent on the year.
"Snowstorms aside, more econ data will set the tone and
direction this week for oil," said Geoff Howie, markets
strategist at MF Global in Singapore.
"Traders will be looking at the string of U.S. economic
numbers coming out this week to see if they can sustain the
strong price moves in December. Overall, we expect the market
to be well-bid. How bid? Well, it depends on the data."
Crude is likely to trade in the range of high-$80s to
$93.50 this week, he added.
Later in the day, the Institute for Supply Management
(ISM) will publish its high-profile measure of U.S. national
factory activity, which is expected to show the pace of
expansion in the manufacturing sector had quickened modestly
in December, reinforcing signs of the economy's gradual
recovery.
Economists are forecasting the ISM's factory activity
index to edge higher to 56.9 from 56.6. Readings above 50
point to growth. []
The Chicago purchasing managers survey reported last week
a surge in Midwest factory activity to its highest level since
1988, prompting some economists to brace for possible upside
surprises in ISM's national survey.
December employment data due on Friday could also provide
price support. A preliminary Reuters survey shows economists
expect nonfarm payrolls increased 126,000. []
The steady decline in U.S. jobless claims in recent weeks
also suggests the pace of job creation picked up in December
after a dismal November. But that is still not enough to
significantly reduce the unemployment rate, which is expected
to edge down to 9.7 percent from 9.8 percent in November.
Analysts have forecast U.S. economic growth at an annual
pace of between 3 percent and 3.5 percent in the fourth
quarter, after a 2.6 percent expansion in the third quarter,
and there is optimism this would boost hiring.
GAINS IN OIL PRICES
But oil's gains could be capped by warmer weather
forecasts this week, after a blizzard recently pummeled the
U.S. Northeast. This could crimp sustained domestic demand for
heating fuel.
A recent cold spell in the U.S. and Europe and OPEC's
decision to keep output levels steady earlier last month have
kept sentiment bullish. Analysts are watching to see how much
of the recent price gains has been caused by seasonal weather
demand and how much has been driven by more structural
consumption growth.
Core OPEC ministers have also indicated they would not
boost oil supplies to arrest the rally, saying that $100 a
barrel was a fair price.
Analysts expect an additional 8 percent gain in average
prices in 2011, according to a latest Reuters poll, although
the conditions for a "super-spike" have dissipated.
This is largely because there is a lot of oil in storage,
far more fuel capacity at refiners worldwide, and far more
idle oil wells that OPEC can reactivate when it chooses,
braking the market's rally in a way it could not three years
ago when crude spiked to $150. []
Crude prices may correct to $83.85 per barrel before
resuming the rally to $96 in the first quarter of the year,
based on its wave pattern and a channel technique, according
to Wang Tao, Reuters market analyst for commodities and energy
technicals. []
The U.S. dollar ended a volatile year on Friday a bit
firmer than where it began, with investors gearing up for
gains in early 2011 on expectations the U.S. economic recovery
was gaining momentum.
U.S. stocks closed out a year of double-digit gains and
the S&P's best December since 1991 with a quiet and
little-changed session on Friday as investors found no reason
to make big bets ahead of the New Year.
(Editing by Manash Goswami)
