* Brent higher, but rise tempered by concerns over impact on
* Traders looking for signs of further China stimulus
By Luke Pachymuthu
SINGAPORE, Sept 17 Brent crude rose for the
eighth consecutive session on Monday to just below $117 a
barrel, though prices remained below a four-month peak hit on
Friday on worries that high oil prices could hamper efforts to
boost a struggling world economy.
Oil has been boosted by the U.S. Federal Reserve's
aggressive moves last week to stimulate the world's biggest
economy, but Brent crude's rally of about a third since late
June could backfire by undermining demand in a fragile economy.
"The current prices certainly doesn't do any favours for a
global economy that is struggling to get back on track. A price
rally like we are seeing now is only going to do more damage,"
said Victor Shum, managing director of consultancy IHS Purvin &
"Fundamentals at the moment are not indicative of these
prices, and I don't see oil being able to sustain this rally."
Brent crude for November delivery, rose 12 cents to
$116.78 a barrel at 0031 GMT, but remained off a four-month peak
hit in the previous session at $117.95 a barrel. Brent gained
2.1 percent in the week ended Sept. 15.
U.S. crude eased 8 cents to $98.92 a barrel, about
1.5 percent off its session high of $100.42 seen on Friday.
Investors were also concerned about the impact rising prices
would have not just on Chinese oil demand, but on the world's
"Obviously rising prices makes it more difficult for
consumers like China," said Ric Spooner, chief market analyst at
CMC Markets in Sydney.
"If we continue to see a further deterioration or a lack of
pick-up in the Chinese economy, then you would be expecting
Beijing to step up stimulus spending," said Ric Spooner, chief
market analyst at CMC Markets in Sydney.
Analysts forecast in a Reuters poll that China would slow
further in the third quarter but regain some momentum late in
the year as the impact of earlier policy easing fully kicks in.
Still, even if activity rebounds modestly in the fourth
quarter, it would drag full-year economic growth to below 8
percent, a level not seen since 1999.
Last week's Fed's decision to tie its third bond-buying
programme directly to economic conditions was an unprecedented
step that marked a major breakthrough in its efforts to drive
down U.S. unemployment.
"They've averted a crisis in Europe in the short-term, and
in the U.S. the Fed has made it clear that it is going to carry
on with stimulus until the economy is stabilised with a view on
improving those unemployment numbers," Spooner said.
Oil was also boosted by rising anti-U.S. demonstrations over
a film protesters consider a slant to Islam and the continued
dispute between the West and Iran's nuclear programme lifted the
risk of a supply disruption in North Africa and the Middle East
Protesters have since late last week attacked the U.S.
embassies in Yemen, Egypt and Tunisia while the United States
sent warships towards Libya, where the U.S. ambassador was
killed by demonstrators. Demonstrations have also taken place in
Kuwait, Iran, Bangladesh, Morocco and Sudan.
"There is definitely an upward pressure on oil prices down
the curve, the threat that these tensions could lead to
potential supply disruptions has raised the risk premium on
oil," Spooner said.
(Editing by Ed Davies)
(Randolph.Fabi@thomsonreuters.com; +65 6870 3803; Reuters