LONDON (Reuters) - Oil jumped almost 3 percent towards $84 a barrel on Monday after Saudi Arabia’s oil minister said consumers were looking for prices between $70 and $90, a higher range than previously targeted.
Ali al-Naimi said on Monday the oil price was “very decent” for producer nations and consumers and that consumers were looking for a market between $70 and $90.
“Consumers are looking for oil prices around $70, but hopefully less than $90,” Naimi said in comments following a speech in Singapore.
U.S. crude for December rose $2.12 to $83.55 a barrel by 1418 GMT. ICE Brent was up $1.95 at $85.10.
“Prices have jumped sharply in the last 30 minutes. Naimi’s comment is probably the most convincing reason,” said Carsten Fritsch, analyst at Commerzbank in Frankfurt.
“It gives assurance that the Saudis won’t do anything to prevent a further rise above $80,” he added. “At least until prices exceed $90.”
Naimi said last month that oil prices between $70 and $80 were ideal. Saudi Arabia, OPEC’s largest producer and its most influential member, has been praising that price range for more than a year.
When oil prices were racing towards their all-time high of nearly $150 a barrel in July 2008, Saudi Arabia assured the market it would produce more oil if demand justified it.
This rally is more modest and Naimi said there was no cause for alarm.
“VERY COMFORTABLE ZONE”
“We’re in a very comfortable zone. I believe this zone should continue for some time. I would not predict for how long,” Naimi said.
“We are in a very decent environment right now for price. If I can be audacious, I would say producers, consumers and companies are all happy with this price.”
Oil has traded mostly between $70 and $80 in the past year.
Crude oil had earlier gained a lift from expectations the U.S. Federal Reserve would commit to a new round of monetary stimulus this week, which weighed on the dollar, and from strong Chinese manufacturing data.
The Fed is widely expected to announce new bond purchases, known as quantitative easing, to pump more money into the U.S. economy, the world’s largest oil consumer, when its two-day meeting ends on Wednesday.
Some economists expect the Fed to buy between $80 billion and $100 billion worth of assets per month. Estimates for how much it will eventually spend vary widely, from $250 billion to as high as $2 trillion.
Traders said prices also drew support after a parcel exploded at a courier company in Athens.
Two air packages containing bombs -- both sent from Yemen and addressed to synagogues in Chicago -- were intercepted in Britain and Dubai on Friday.
The dollar fell against a basket of currencies on Monday, slipping back towards a 15-year low versus the yen. A weaker dollar can boost the appeal of commodities as an investment.
Oil also rose following unexpectedly strong manufacturing data from China, the world’s second-largest oil consumer, which also gave a lift to shares in Europe and Asia.
Two surveys of the manufacturing sector, which are designed to provide an early indication of conditions in a broad range of industries, both jumped to six-month highs in October.
Much of the growth in global oil demand this year is coming from China and other emerging economies, offsetting largely stagnant consumption in Europe and the United States.
Writing by Christopher Johnson; editing by Sue Thomas
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