Oil hovers below $87 as OPEC raises crude output

[February 10, 2011]  SINGAPORE (AP) -- Oil prices hovered below $87 a barrel Thursday in Asia after a report showed OPEC boosted crude output last month to a two-year high amid signs of growing global demand.

Benchmark crude for March delivery was down 13 cents at $86.58 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 23 cents to settle at $86.71 on Wednesday.

In London, Brent crude fell 24 cents to $101.58 a barrel ICE Futures exchange.

According to a report Wednesday from Platts, the energy information arm of McGraw-Hill Co., crude oil production by the 12-member Organization of Petroleum Exporting Countries rose 1 percent last month to average 29.57 million barrels per day, a two-year high.

OPEC has kept its official crude production quotas unchanged as oil has risen from the $70s most of last year to a two-year high above $92 last week. Higher oil prices have helped fuel inflation and threaten to undermine the global economic recovery.

Earlier this week the U.S. Energy Information Administration boosted its estimate for 2010 oil demand growth to 2.39 million barrels a day, which would be the second biggest annual increase in consumption in the past 30 years.

"The message remains one of significantly tightening oil market balances over the next few years," Barclays Capital said in a report.

In other Nymex trading in March contracts, heating oil fell 1.2 cents to $2.76 a gallon and gasoline slid 0.4 cent to $2.52 a gallon. Natural gas futures for March delivery were up 1.2 cents at $4.06 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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