* Coming Up: U.S. ISM survey at 1500 GMT
* U.S. and Brent futures reach highest since October 2008
* U.S. oil in contango structure, suggests ample supply
(Updates throughout, previous SINGAPORE)
By Barbara Lewis
LONDON, Jan 3 (Reuters) - Oil extended a rally above $92 a
barrel on Monday, spurred by expectations that a global economic
recovery is gathering strength and as market bulls set their
sights on $100 a barrel.
U.S. crude <CLc1> was trading 77 cents higher at $92.15 a
barrel by 1108 GMT, just off a session high of $92.20, its
highest since October 2008. It settled at $91.38 on Friday,
marking an annual gain of around 15 percent and the highest
year-end price since 2007.
Brent <LCOc1> was up $1.20 a barrel at $95.95, off an
intraday peak of $96.04, also the highest since early October
2008.
Trade was thinned by a public holiday in the United Kingdom
but could take direction later on Monday from a survey by the
Institute for Supply Management (ISM) -- a measure of U.S.
national factory activity.
It was expected to show a slight expansion in the
manufacturing sector, reinforcing the view the economy in the
world's largest oil consumer is expanding and therefore driving
up energy demand. []
"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," said Geoff
Howie, markets strategist at MF Global in Singapore.
Commodities as a whole embarked on a compelling rally in
September last year, driven by expectations of quantitative
easing and a weakened U.S. dollar, which tends to be bullish for
dollar-denominated commodities.
OPEC OUTPUT POLICY UNCHANGED
The Organization of the Petroleum Exporting Countries helped
to stoke bullish sentiment by saying the market was still well
supplied and that it would not implement any formal change in
output unless it saw a convincing shift in the balance of supply
and demand. []
Some analysts agreed the rally was speculative.
"It does not make sense on a fundamental basis," said
Olivier Jakob of Petromatrix. "The structure of the market is
telling a different story from the flat price."
U.S. crude futures have been stuck in a stubborn contango,
whereby prompt oil is cheaper than that for later delivery, a
market condition that encourages storage.
Traders, however, said there was momentum to move higher as
new money was expected to enter the market at the start of the
year and that in the short term there was little choice but to
follow it.
"The answer is to go with it or you'll lose money," said one
trader who could not be named.
Prices could still falter before the next move higher,
possibly correcting to $83.85 per barrel, based on its wave
pattern and a channel technique, according to Wang Tao, Reuters
market analyst for commodities and energy technicals.
[]
(Additional reporting by Jennifer Tan in Singapore, editing
by Jane Baird)
