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Oil approaches two-week high on Ireland rescue

EU's Ireland rescue pushes oil past $84 on Monday

AFP, Monday 29 Nov 2010
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Oil rose past $84 on Monday after the European Union approved a rescue for Ireland and outlined a permanent system to resolve the euro zone's debt crisis, providing some confidence that energy demand growth will remain resilient next year. Analysts however cautioned that gains might be brief due to ongoing concerns over the eurozone debt crisis. The dollar's strength against the euro is also likely to pressure crude prices downwards, they said.

In afternoon trade, New York's main contract, light sweet crude for January delivery, gained 56 cents to 84.32 dollars a barrel.Brent North Sea crude for January gained 53 cents to 86.11 dollars.

"Oil and the dollar have an inverse relationship so we could see some downward pressure on oil if the dollar continues to rise," said Ong Yi Ling, Phillip Futures' investment analyst. A stronger dollar makes dollar-priced crude more expensive for buyers using weaker currencies and that in turn tends to hit demand and prices.

"Another factor will be the eurozone debt crisis.... That could affect future demand for oil," she told AFP.

The euro fell to a fresh two-month low of 1.3181 dollars in early Asian trade, its weakest level since late September as investors remain worried about the eurozone's worsening debt crisis.Eyes were also on Portugal and Spain amid speculation they may need bailouts after debt-ridden Ireland said it will receive an 85-billion-euro package from the European Union and the International Monetary Fund.

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