Oil reaches two-week high
Tuesday, 30 November 2010
LONDON, Nov 29 (Reuters): Oil rose to a two-week high above $85 Monday after the European Union approved a rescue for Ireland and outlined a permanent system to resolve the euro zone's debt crisis.
Worries that a spreading crisis within the euro zone would keep a lid on growth and hence energy demand have helped pressure commodities prices over the last week, pulling down oil from a two year high of $88.63 on November 11.
US crude for January rose 1.5 per cent or $1.27 to a high of $85.03 a barrel before easing back to trade at $84.76 at 0845 GMT.
ICE Brent for January rose 90 cents to $86.48, returning to positive territory as the dollar weakened by 0.2 per cent against a basket of currencies.
Finance ministers from the 16-nation euro zone, anxious to prevent euro debt concerns engulfing Portugal and Spain, unanimously endorsed an emergency loan package of 85 billion euros ($115 billion) to help Dublin cover bad bank debts and bridge a huge budget deficit.
"The southern European sovereign debt crisis would have to take a severe turn for the worse to derail positive commodity price trends that are finding strong support from improving fundamentals and positive market sentiment toward growth assets" following the second wave of US expansionary monetary policy, Barclays Capital analysts said in a report.
Still, some market participants were wary that the package for Ireland would fail to end Europe's credit problems, citing the Greek crisis as a precedent of how markets initially reacted positively to a bailout and then slumped.
Worries that a spreading crisis within the euro zone would keep a lid on growth and hence energy demand have helped pressure commodities prices over the last week, pulling down oil from a two year high of $88.63 on November 11.
US crude for January rose 1.5 per cent or $1.27 to a high of $85.03 a barrel before easing back to trade at $84.76 at 0845 GMT.
ICE Brent for January rose 90 cents to $86.48, returning to positive territory as the dollar weakened by 0.2 per cent against a basket of currencies.
Finance ministers from the 16-nation euro zone, anxious to prevent euro debt concerns engulfing Portugal and Spain, unanimously endorsed an emergency loan package of 85 billion euros ($115 billion) to help Dublin cover bad bank debts and bridge a huge budget deficit.
"The southern European sovereign debt crisis would have to take a severe turn for the worse to derail positive commodity price trends that are finding strong support from improving fundamentals and positive market sentiment toward growth assets" following the second wave of US expansionary monetary policy, Barclays Capital analysts said in a report.
Still, some market participants were wary that the package for Ireland would fail to end Europe's credit problems, citing the Greek crisis as a precedent of how markets initially reacted positively to a bailout and then slumped.