Oil price rise on weak dollar

19th November 2010, Comments 0 comments

World oil prices advanced on Friday with the dollar weakening as indebted Ireland edged closer to a financial bailout, while traders shrugged off China's latest move to crack down on inflation.

New York's main contract, light sweet crude for delivery in December, added 19 cents to 82.04 dollars per barrel.

Brent North Sea crude for January gained 43 cents to 85.48 dollars a barrel in London trade.

"Crude oil prices extended gains, supported by a stronger euro as concerns about Ireland's debt eased after its central bank chief reported that he expects Dublin to receive tens of billions of euros in loans from the European Union and IMF," said Sucden analyst Myrto Sokou.

She added: "Investors are waiting for a final deal regarding Ireland's debt situation, and trading conditions might remain fairly nervous and volatile."

The European single currency rose against the dollar on signs that debt-hit Ireland is nearing a bailout. A weaker dollar tends to stimulate oil prices because crude becomes more affordable for buyers using stronger currencies.

In Dublin, international financial experts and Irish officials begin tough negotiations Friday on a possible bailout for the nation's debt-ridden economy.

The delegation from the European Union, the European Central Bank and the International Monetary Fund will subject Ireland's books to forensic analysis.

In Asia, China's central bank said it would raise the amount of money that lenders must keep in reserve amid efforts to contain rising inflation and soaring housing costs.

The announcement failed to stir the oil market.

"It seems that news China increased reserves requirements by 50 points did not affect the market sentiment and failed to provide a clear direction for oil prices," added Sokou.

The People's Bank of China said its reserve ratio would be raised by 50 basis points from November 29.

The hike is the fifth this year and the second this month, highlighting growing concerns among top leaders that rampant bank lending is fanning inflationary pressures in the Chinese economy.

© 2010 AFP

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