Oil price hovers around two year high

City A.M. Reporter
Oil hovered near the highest price levels in more than two years, as accelerating manufacturing activity in industrialised economies and winter weather fanned expectations that US crude inventories will continue to drain.

US crude for February fell 12 cents to $91.43 a barrel, about a dollar below Monday's peak of $92.58, the highest intraday price since early October 2008.

ICE Brent was unchanged at $94.84, having topped $96 on Monday for the first time since 2008.

"Oil sentiment has turned decidedly bullish, partly driven by unusually cold weather, but more due to an increasingly optimistic consensus view on 2011 economic performance, especially for the US," JPMorgan analysts led by Lawrence Eagles said.

Prices rallied on Monday, stoked by accelerating manufacturing activity in industrialised economies and icy weather.

Crude oil inventories in the United States, the world's top consumer, probably fell for the fifth-straight time last week, down by 1.7m barrels, a Reuters poll ahead of weekly supply data showed on Monday.

Refiners continued to use up more of their stored crude supplies while holding off on imports to lower their year-end taxes, analysts said.