Oil snapped a four-day drop after Ireland’s central bank governor said he expects the country to seek help. A U.S. report yesterday showed crude supplies unexpectedly dropped the most since August 2009 and prices held above technical support at $80 a barrel.
“The Ireland data and the dollar have added a little bit of price support today,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. “In general, recent market moves may be driven by technical factors rather than fundamentals, though yesterday’s inventory report was bullish across the board.”
Crude for December delivery gained $1.85, or 2.3 percent, to $82.29 a barrel at 12:21 p.m. on the New York Mercantile Exchange. Prices have risen 3.4 percent in the past year.
Crude oil touched $80.06 a barrel yesterday, the lowest level since Oct. 20 and close to the lower limit of its Bollinger band, or $79.41 a barrel. The Bollinger bands reflect historical price swings and possible support and resistance levels.
Irish Central Bank Governor Patrick Honohan said in an interview with state broadcaster RTE today he expects the country to ask the EU and the International Monetary Fund for “tens of billions” of euros to rescue its banks.
Desirable Outcome
“If these talks were to result in a substantial contingency capital funding” pool that didn’t need to be drawn down, that “would be a very desirable outcome,” Finance Minister Brian Lenihan said in the Irish parliament in Dublin today. He said no agreement has yet been reached.
The dollar fell 0.8 percent to $1.3635 per euro in New York, the biggest decline in three weeks. A weaker dollar increases the appeal of commodities as an alternative investment.
The Thomson Reuters/Jefferies CRB Index of 19 commodities advanced 2.2 percent to 302, the first increase in three days. Eighteen of the commodities rose.
“The situation in Europe looks like it’s going toward a solution,” said Sintje Diek, an analyst with HSH Nordbank in Hamburg. “There will be a rescue for Ireland, and that’s good news for the euro. Fundamentals are on the side of investors; inventories are going down.”
The Energy Department report yesterday showed crude supplies fell 7.29 million barrels last week to 357.6 million. Imports tumbled 2.8 percent to 7.86 million barrels a day, the lowest level since December.
$80 Oil
The Organization of Petroleum Exporting Countries is “happy” with oil prices above $80 a barrel, said Mohamed al-Hamli, the oil minister from the United Arab Emirates, the group’s fourth-largest oil producer after Saudi Arabia, Iran and Iraq.
“Everybody is happy about this price,” he said today at an oil and gas conference in Ashgabat, Turkmenistan. “There is some sort of stability” with oil at $75 to $80 a barrel.
Crude will average $80 a barrel in 2011 and may reach $100 by 2015, Adam Sieminski, chief energy economist at Deutsche Bank, said today at the 2010 Deloitte Oil & Gas Conference in Houston. Futures have averaged $78.53 a barrel in New York so far this year, based on prices through yesterday.
Oil also rose as the index of U.S. leading indicators climbed for a fourth consecutive month in October and manufacturing surged in the Philadelphia area, signaling that the world’s largest economy is accelerating. The U.S. is the world’s largest oil consumer.
Brent crude for January settlement increased $2.06, or 2.5 percent, to $85.34 a barrel on the London-based ICE Futures Europe exchange.
Oil volume in electronic trading on the Nymex was 470,545 contracts as of 12:27 p.m. in New York. Volume totaled 941,801 contracts yesterday, 31 percent above the average of the past three months. Open interest was 1.43 million contracts.
