Oil higher as IEA warns of $100 price
Singapore - Oil rose in Asian trade on Wednesday as the International Energy Agency warned that high crude prices posed a risk to the global economy.
New York's main contract, light sweet crude for February delivery, gained 19c to $91.57 and Brent North Sea crude for March delivery was 2c higher at $97.82.
The IEA in its monthly report on Tuesday said "recent price levels already pose a real economic risk - something of deep concern to producers and consumers alike".
Recent trading has seen crude rally to near $100 a barrel - a mark first breached January 2008 - fuelled by the expectation of strong demand as the global economic recovery continues.
"Global demand conditions remain extremely strong, supporting prices at current levels, while Opec's stance that the market remains well supplied adds to its reluctance to increase production to meet that growing demand," analysts from Barclays Capital said in a report.
Oil prices of $100 a barrel represent a burden of five percent of gross domestic product on the global economy, the IEA calculated, and said such levels in the past "have clearly been associated with economic problems."
"Ultimately, oil producers, financial investors and consumers (notably import-dependent developing countries) all suffer under such a scenario," the IEA report said.
The IEA, the energy policy and monitoring arm of the 34-member Organisation for Economic Cooperation and Development, said growth in oil demand in 2010 was at one of the strongest rates in three decades, albeit from a low crisis level.
Oil demand grew 3.2% last year, an increase of 2.7 million barrels per day to 87.7 million, it said.
Moreover, "such demand strength appears to be more related to a buoyant economic recovery than to the frigid weather conditions that prevailed in most of the northern hemisphere in late 2010."