Oil nears $83 a barrel
Published 22/11/2010 | 11:27
Oil rose, rebounding from its biggest weekly loss in three months, on optimism an agreement to rescue Ireland’s banks will prevent Europe’s debt woes from sapping economic growth and demand for fuels.
Futures retraced some of last week’s 4pc slump after Ireland yesterday asked for a bailout from the European Union and the International Monetary Fund to save its banks.
The decision pushed the euro to a one-week high versus the dollar, boosting the appeal of commodities to investors.
“The Irish bailout story is driving today’s gains,” said Thorbjoern Bak Jensen, an analyst at Global Risk Management in Middelfart, Denmark. “The speculation that Ireland wouldn’t get support had been putting pressure on prices earlier.”
Crude for January delivery gained as much as 89 cents, or 1.1pc, to $82.87 a barrel in electronic trading on the New York Mercantile Exchange. It was at $82.78 at 10:15am.
Brent crude for January settlement advanced as much as $1.11, or 1.3pc, to $85.45 a barrel on the London-based ICE Futures Europe exchange.
On November19, the New York contract slipped 44 cents, or 0.5pc, to $81.98. Futures are up 4.1pc this year.
Prices fell at the end of last week after China ordered banks to raise reserves in a move that may slow growth and crimp fuel demand in the world’s largest energy-consuming country.
The Dollar Index, used by IntercontinentalExchange Inc to track the dollar against six major global currencies, fell 0.5pc to 78.101. It’s down for a fourth day.
“The euro debt concerns are easing as Ireland has decided to accept the bailout and that will lead to a weaker dollar,” said Serene Lim, a commodity strategist at Australia & New Zealand Banking Group Ltd in Singapore. “It’s more of the dollar weakening that’s helping to drive oil higher.”
US diesel consumption increased in October from a year earlier, a signal that the US economy is rebounding, according to the American Petroleum Institute.
Demand for ultra-low sulfur diesel, the type used on highways, rose 8.4pc to average 3.19 million barrels a day last month, the industry-funded group said November 19. Consumption during the first 10 months of this year climbed 2.9pc to 2.97 million barrels a day.
Hedge funds cut bullish bets on oil by the most in almost three months. Large speculators reduced so-called long positions, or wagers on rising prices, by 15pc in the seven days ended November 16, according to the US Commodity Futures Trading Commission’s weekly report November 19.
It was the first drop in four weeks and the largest decline since the seven days to August 24.