Oil rallied to its highest in more than two years on Thursday on reports that major oil consumers may use more of the commodity next year. Oil rose despite a strong dollar on the day, which analysts largely attributed to the latest demand-supply equations of the commodity.
Data from China, world's second largest oil consumer, showed that its daily consumption jumped to a record 8.92 million barrels, while Organization of Petroleum Exporting Countries (OPEC) lifted its demand forecast for 2011, mostly on the back of expectations of increased consumption in the OECD countries.
A report from the US showed Wednesday that its crude inventories unexpectedly fell last week, also fuelling the price rally.
OPEC raised its 2011 estimate of global oil demand growth by 120,000 barrels per day (bpd) to 1.17 million bpd, forcing market participants to bet on possibilities of the commodity hitting $90 a barrel in the near-term. It rose above $88 on Thursday, its highest in 25 months.
EIA (Energy Information Administration) said on Wednesday that the US inventories fell by 3.3 million barrels when the market was expecting a rise of 1.4 million barrels.
Another data from the US showed jobless benefit claims fell to its lowest in four months last week and that the international trade gap narrowed in September, signaling improvement in world's largest economy.