- 09Nov
(Reuters) - Oil resumed gains to hit a fresh two-year high above $87 on Tuesday, erasing earlier losses, as commodities rallied across the board.
U.S. crude oil futures hit $87.63 a barrel, the highest since October 2008, and were trading 16 cents higher at $87.23 by 1454 GMT. ICE Brent was 16 cents higher at $88.62.
Oil reversed course and rose following the release of the International Energy Agency's long-term energy outlook, in which the Paris-based body said oil prices might exceed $100 a barrel in 2015 and $200 in 2035.
"We believe the age of cheap oil is over. Both on the demand side and the supply side, in order to find market equilibrium, we may need higher prices in the future," the IEA's chief economist Fatih Birol said at a news conference.
Analysts said the $100 mark provided a clear price target for investors, but return on investments might not be dramatic.
"That $100 per barrel is four-five years away. It is not much support to oil prices," Olivier Jakob at Petromatrix said.
Analysts also said gains might be limited by a stronger dollar against the euro, due to renewed concern about debt in Europe, and to an expected rise in U.S. oil inventories.
"The top end of prices will be weighed by renewed concerns over sovereign debts in Europe, while crude prices would move with a solid floor due to money inflows into risky assets following the further easing (in the United States)," analysts with Mizuho Corporate Bank in Tokyo said in a research note.
"Ahead of the (U.S. government) oil inventory data tomorrow narrow range price movements are likely today."
Wider commodities markets rallied due to risk appetite on the back of the U.S. Federal Reserve's decision last week to inject $600 billion to spur a flagging recovery.
INVENTORIES
U.S. crude inventories probably increased by 1.4 million barrels in the week to November 5 as imports rebounded, a Reuters poll of analysts showed on Monday.
The American Petroleum Institute will issue its oil stocks report on Tuesday at 2130 GMT, followed by the U.S. Energy Information Administration's (EIA) government data on Wednesday.
The analysts in the poll forecast a drawdown of 1.8 million barrels for middle distillate inventories, which includes heating oil and diesel, down for the seventh consecutive week, while gasoline stocks fell 1 million barrels.
The U.S. EIA will release its outlook for 2011 oil consumption in the United States and the world later on Tuesday.
Analysts expected the EIA to increase its forecast for next year.
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