Font Size

- Aa +

Mon 22 Nov 2010 12:47 PM

Font Size

- Aa +

Oil climbs after Ireland agrees with EU on bank rescue package

Oil rises, rebounding from its biggest weekly loss in three months

Oil climbs after Ireland agrees with EU on bank rescue package
US diesel consumption increased in October from a year earlier (Getty Images)

Oil rose, rebounding from its
biggest weekly loss in three months, amid optimism that an agreement to rescue
Ireland’s banks may reduce European sovereign-debt concerns.

Futures retraced some of last week’s
4 percent slump after Ireland on Sunday applied 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 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.”

Crude for January delivery gained as
much as 84 cents, or 1 percent, to $82.82 a barrel in electronic trading on the
New York Mercantile Exchange. It was at $82.55 at 3:53 p.m. Singapore time. On
Nov. 19, the contract slipped 44 cents, or 0.5 percent, to $81.98. Futures are
up 4.1 percent 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 greenback against six major global
currencies, fell 0.5 percent to 78.112. It’s down for a fourth day.

“The Irish debt situation has been
contained for the moment,” said David Taylor, a market analyst at CMC Markets
Ltd. in Sydney.

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 8.4 percent to average 3.19 million barrels a
day last month, the industry-funded group said Nov. 19. Consumption during the
first 10 months of this year climbed 2.9 percent 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 15 percent in the seven days ended
Nov. 16, according to the US Commodity Futures Trading Commission’s weekly
report Nov. 19. It was the first drop in four weeks and the largest decline
since the seven days to Aug. 24.

Brent crude for January settlement
advanced as much as 91 cents, or 1.1 percent, to $85.25 a barrel on the
London-based ICE Futures Europe exchange. On Nov. 19, the contract dropped 71
cents, or 0.8 percent, to $84.34.