RTRS: Oil rises above $82 as euro zone concerns ebb
By Florence Tan
SINGAPORE (Reuters) - Oil rose on Monday to more than $82 a barrel, rebounding from two straight weeks of losses, as the dollar weakened after Ireland sought an international bailout to tackle its banking and budget crisis.
The euro, most Asian stocks and commodities got a fillip as optimism over the bailout outweighed concerns about tighter monetary policies in China, the world's second largest energy consumer, designed to fight inflation.
U.S. crude for new front-month January delivery rose 58 cents to $82.56 a barrel by 0502 GMT, after the expired December contract suffered its largest percentage decline since the week to August 13. January ICE Brent was up 60 cents at $84.94 a barrel.
The actual share of fundamentals is still only about 50 percent, with financials still playing a big part in oil price
movements, Fredreic Lasserre, global research head for commodities at Societe Generale, told Reuters in Singapore.
Commodities remain a good hedge against long-term inflation, Lasserre said.
The U.S. dollar index fell below major support around 78.27-37 to 78.14, down 0.5 percent on the day, on Ireland's rescue deal. A weaker dollar makes oil cheaper for holders of other currencies.
The market also shrugged off the impact of tightening monetary policies in China after the country raised bank reserve requirements and Hong Kong imposed measures aimed at curbing rising property prices.
"They want to cool the market which is good for the economy," said Ken Hasegawa, commodities derivatives sales manager at Newedge Japan.
"It's a strategy to prevent inflation. They really want to grow gradually."
PROFIT-TAKING
An improving supply-demand situation in the U.S., as the economy of the world's largest energy consumer gradually picks up, will also support oil prices, Hasegawa said.
"U.S. inventories are getting lower, especially for gasoline and distillates," he said, adding that they had fallen below last year's levels.
Societe Generale's Lasserre said there was still a "slight
surplus in the market now".
He expects to see inventories down to 55 days and the market to be in backwardation by the third quarter next year.
However, Newedge's Hasegawa remained concerned that oil could fall below $80 on profit-taking at the end of the year.
"I'm looking at whether long-position holders will really liquidate their positions towards the end of the year."
Money managers cut net long crude oil positions on the New York Mercantile Exchange from record high levels in the week through November 16, the Commodity Futures Trading Commission said on Friday.
