BLBG: Crude Oil Rises, Paring Weekly Loss, as Concern Eases Over Ireland's Debt
Oil rose, paring its biggest weekly loss in two months in New York, amid speculation a European Union-led bailout of Ireland may be enough to stabilize sovereign-debt concerns in the region.
Futures retraced losses of as much as 0.5 percent as the dollar dropped against the euro, bolstering the appeal of commodities as an alternative investment. Prices rose 1.8 percent yesterday after Ireland’s central bank governor said he expects the country to seek help. January oil contracts are $2.86 a barrel more in London than in New York, more than double the difference of a week ago.
“Oil market fundamentals have improved over the last few months, and we might now be at the point of correction,” said David Wech, head of research at JBC Energy GmbH in Vienna. “Winter is the time when European demand plays a role in the oil market, because you have this substantial heating oil demand.”
Crude for December delivery rose as much as 90 cents, or 1.1 percent, to $82.75 a barrel in electronic trading on the New York Mercantile Exchange. It was at $82.61 at 9:20 a.m. London time. Brent crude for January settlement rose as much as $1.10, or 1.3 percent, to $86.15 a barrel on the London-based ICE Futures Europe exchange.
The Nymex December future expires today. The more-actively traded January contract was up 75 cents at $83.17 a barrel.
Crude has dropped 2.7 percent this week, the most since the seven days ended Sept. 17, as Ireland grappled with its deficit and China’s Premier Wen Jiabao said the government was drafting measures to counter inflation.
Ireland, China
“We’ve been worried about two major issues, in Ireland’s debt concern and Chinese rate rises,” said David Taylor, a market analyst at CMC Markets Ltd. in Sydney.
The dollar declined for a third day against the euro to trade at $1.3702, after losing 0.8 percent yesterday. The Dollar Index, which measures the greenback against six other major world currencies, was down 0.4 percent.
Irish Central Bank Governor Patrick Honohan said yesterday in an interview with state broadcaster RTE that he expects the country to ask the EU and the International Monetary Fund for “tens of billions” of euros to rescue its banks.
Oil in New York may increase next week amid speculation Ireland will accept the bailout, a Bloomberg News survey showed. Eighteen of 38 analysts and traders, or 47 percent, forecast crude will climb through Nov. 26. Ten respondents, or 26 percent, predicted prices will fall and 10 estimated there would be little change. Last week, 43 percent said futures would rise.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net; Christian Schmollinger in Singapore at Christian.s@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
