* Supportive economic data helps fuel new-year rally
* Colder forecasts further out lift heating fuel futures
* Coming up: API weekly oil data at 4:30 p.m. EST Tuesday
(Recasts; updates market activity, prices and changes byline;
dateline previously LONDON)
By Robert Gibbons
NEW YORK, Jan 3 (Reuters) - Oil prices started the new
year by rising sharply on Monday, as supportive U.S. economic
data fed expectations of stronger energy demand and extended
forecasts for more cold temperatures lifted heating oil
futures.
Earlier on Monday, news that China's factory inflation
cooled in December helped ease concerns that China would resort
to more monetary tightening to curb economic growth and in turn
weaken growth in energy demand.
U.S. crude oil futures were building on their end-of-year
rally that left prices above $91 on Friday and up 15 percent on
the year. They posted the highest year-end level since 2007
when the market was ascending to the all-time high of $147 a
barrel hit in July 2008.
U.S. crude oil for February delivery <CLc1> rose 81 cents,
or 0.89 percent, to $92.19 a barrel at 12:06 p.m. EST (1706
GMT), having reached a peak of $92.58, the highest price for
front-month crude oil since the $93.02 intraday peak of Oct. 7,
2008.
Total U.S. crude futures trading volume has been thinned by
the holiday season and was at about 236,000 lots at midday in
New York. The 30-day average was 543,282 on Monday.
U.S. February heating oil <HOc1> rose 2.76 cents, or 1.09
percent, to $2.57 a gallon.
In London, ICE Brent crude for February <LCOc1> rose 76
cents to $95.51 a barrel.
ICE gas oil for January delivery <LGOF1> rose 3.7 percent
to $790.75 a tonne.
"Heating oil strength is on the colder forecasts further
out, and on top of that crude is being supported by the strong
manufacturing data," said Phil Flynn, analyst at PFGBest
Research in Chicago.
Total U.S. heating demand this week was expected to be only
0.5 percent above normal, the U.S. National Weather Service
said, and heating oil demand was expected to average 4.3
percent below normal. []
But looking further out, the NWS' six- to 10-day and eight-
to 14-day outlook issued Sunday called for below-normal or
much-below-normal readings for the entire nation.
Temperatures in northern Europe also were forecast to be
near to below normal in the six- to 10-day outlooks, according
to private forecaster DTN Meteorlogix. []
The fresh batch of encouraging economic data helped lift
U.S. equities, pushing the Nasdaq 100 to a 10-year high. []
U.S. manufacturing grew for a 17th straight month in
December, an Institute for Supply Management report showed on
Monday. The report showed new orders rose, suggesting momentum
for growth even though factory sector employment slipped to a
nine-month low. [] []
U.S. construction spending rose more than expected in
November to touch its highest level in five months, a separate
report from the Commerce Department showed. []
Prior to the U.S. reports, investors received news that the
official Chinese purchasing managers' index edged down to 53.9
in December from November's 55.2, below a median forecast of
55.5 in a Reuters survey of economists. That eased fears of
more efforts by China's government to cool off its economy.
[]
U.S. CRUDE IN CONTANGO
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. The spread between
front-month February and March crude futures <CL-1=R> had the
premium for March crude as high as $1 intraday on Monday.
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.
Prices could still falter before the next push higher,
possibly correcting to $83.85 per barrel, based on a wave
pattern and a channel technique, according to Wang Tao, Reuters
market analyst for commodities and energy technicals.
[]
(Reporting by Robert Gibbons; editing by Jim Marshall)
