* Libya's Ghanem says $100 a barrel would be a fair price
* Cold weather in U.S., Europe boosts demand
* Crude up more than 30 pct from 2010 low
* Lowest trading volume this year may have aided gains
(Recasts, updates throughout)
By Barbara Lewis and Jonathan Leff
NEW YORK/LONDON, Dec 23 (Reuters) - Oil surged above $91 a
barrel to its highest price in more than two years on Thursday,
as OPEC member Libya's apparent lack of concern over prices
prompted some analysts to call for a new year's run at $100.
With crude reaching back-to-back 26-month highs, ultra-cold
weather stoking demand and depleting U.S. stockpiles at the
fastest pace in 12 years, traders are now looking for the
Organization of the Petroleum Exporting Countries to signal
when it might begin pumping more crude.
But Libya's top oil official, one of OPEC's most hawkish
members toward oil prices, appeared unconcerned by the gains,
which have lifted prices more than 20 percent in three months
as fundamentals turn more positive and investors factor in an
improving economic outlook for next year.
"It's fair to say it (the price) is about right, but still
I think that it needs to improve a little bit more. About $100
would be a fair price for the time being," Libya's National Oil
Corp Chairman Shokri Ghanem told Reuters in Cairo ahead of a
meeting of Arab oil exporting countries.
"I think current oil prices are reflecting the situation in
the market which is a well-balanced market," he said.
U.S. crude for February <CLc1> rose $1.03 to settle at
$91.51 a barrel, the highest price since Oct. 7, 2008 when oil
prices were crashing from their $147 record as the world's
financial industry reeled and investors fled risky assets.
Prices hit an intraday peak of $91.63 a barrel.
ICE Brent crude <LCOc1> settled at $94.25, up 60 cents from
Wednesday after a midsession burst of gains triggered by
buy-stops and as the dollar fell.
Although some said low trading volume on the last day
before Christmas likely exaggerated gains, few expected to see
a correction as traders looked forward to a fresh infusion of
institutional investment in the booming commodities sector.
U.S. crude traded about 220,000 contracts, one-third the norm.
"I don't think we'll pull back much before February. We'll
see some fund allocations next month so we should continue to
see support," said Antoine Halff of Newedge Group in New York.
So far economic news is supporting the gains too. Data on
Thursday showed new U.S. claims for jobless benefits dipped
last week and consumer spending increased in November for a
fifth straight month, reinforcing views of a solid economic
growth pace in the fourth quarter. []
And while gasoline prices now back above $3 a gallon could
begin to erode spending in the still fragile U.S. economy, the
fact that they remain far below their $4 peak two years ago
suggests they will not pack the same psychological punch.
NOT THE SAME MARKET AS 2008
Nearly three years after oil first traded at $100, demand
is again rising swiftly, but one key factor has changed
significantly. Unlike the start of 2008, when OPEC was already
pumping flat out, the group now has a sizable amount of idle
capacity it could use to douse the rally -- if it chooses.
A series of comments in recent months suggest the cartel is
now ready to tolerate a price higher than the $70-to-$80 band
it has publicly supported for the past two years, and analysts
say that means it may wait too long before pumping more oil.
"With OPEC set to be reactive rather than proactive, the
route to $100 appears fairly unobstructed at this time," said
analysts at Barclays Capital.
Oil traders will be looking for comments this weekend from
other core Gulf OPEC ministers to see if they are more
concerned than they were two weeks ago when the group decided
at its meeting in Quito, Ecuador, to maintain supply quotas.
The meeting of the Organization of Arab Petroleum Exporting
Countries (OAPEC) in Cairo will not set policy, and OPEC's next
formal meeting is not scheduled until June.
But some analysts say they expect the group to quietly lift
output prior to that by leaking more oil than quotas permit,
and few expect a rerun of 2008's explosive rise.
"We're not back to before the 2008 crisis, this is not the
same market... We have a lot more spare capacity, and demand
growth is tentative," said Halff.
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Graphic on prices: http://link.reuters.com/jaw43r
PREVIEW of Cairo meeting: []
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FASTEST DRAW IN THE WEST
Unusually cold weather in the United States and Europe has
helped to spur the latest leg of a more than 30 percent rally
from this year's low struck in May.
After a contraction in demand following the global economic
recession, fuel use has begun to rebound and is expected to
continue growing next year, taking absolute oil consumption to
an all-time high. But the rate of growth will still be lower
than a peak hit in 2004. []
"Markets still have an upward bias. They just took out the
recent and earlier highs and ran a few stops. Economic
optimism, cold weather and crude stock drawdown are supporting
in the background," said Tom Bentz, broker at BNP Paribas
Commodity Futures in New York.
(Additional reporting by Randolph Fabi and Seng Li Peng in
Singapore, Sherine El Madany in Cairo and Selam Gebrekidan in
New York; editing Alden Bentley)
