LONDON—Crude-oil futures gained more ground on relief that China, one of the world's global economic motors, refrained from hiking interest rates over the weekend despite rising inflation.
Stronger equities markets also provided some support to oil futures.
The front-month January Brent contract on London's ICE futures exchange recently was up $1.48, or 1.6%, at $91.96 a barrel. The front-month January light, sweet crude contract on the New York Mercantile Exchange was trading up $1.24, or 1.4%, at $89.03 a barrel.
China's central bank didn't raise benchmark interest rates, though November consumer price index rose 5.1% on year, the fastest since July 2008. The National Development and Reform Commission, China's economic planning body, said Saturday the 5.1% rise in November CPI was largely driven by temporary and seasonal factors, and CPI is expected to slow in December.
The central bank late Friday did raise its reserve requirement for banks for the third time in a month. Some had still expected an interest-rate rise after Saturday's release of inflation data.
But traders and analysts remain cautious. "We believe a rate rise will come through sooner rather than later, and that this will ultimately trigger a correction in a number of already overheated commodity markets," said Edward Meir, senior commodity analyst of MF Global.
Saturday's meeting of the Organization of the Petroleum Exporting Country in Quito, Ecuador, failed to have any impact on the oil market. OPEC didn't change its output quota, in line with market expectations.
Looking ahead, the outlook for global oil demand seems brighter. Both the International Energy Agency and OPEC revised up global oil demand in separate reports issued Friday. The IEA revised up global oil demand for 2011 by 260,000 barrels a day to 88.8 million barrels a day.
This, coupled with strong heating demand in northern hemisphere, will continue to support oil prices.
"I do expect oil prices to breach the $100/bbl level at some point in time during the course of the winter heating season," said Dominick A. Chirichella, an analyst at Energy Management Institute. "There are still many more positives coming from the macroeconomic side than negatives that should be supportive for oil prices in the short to medium term."
