Oil prices slide as dollar recovers

22nd November 2010, Comments 0 comments

World oil prices slid in trading here late on Monday as the dollar recovered against the euro amid concerns over eurozone debt, traders said.

Prices had earlier risen as the euro's value soared against the dollar following the agreement of a massive bailout for debt-laden Ireland but the positive sentiment soured on fears that other nations may need rescuing.

Brent North Sea crude for delivery in January dropped 89 cents to 83.45 dollars a barrel in late London trade after earlier jumping more than one dollar.

New York's main contract, light sweet crude for December, shed 98 cents to 81.00 dollars.

A stronger dollar makes oil more expensive for buyers using weaker currencies, hurting demand.

Oil prices tracked the foreign exchange market after the European Union and International Monetary Fund on Sunday agreed to bail out Ireland, with sources putting the cost at 80 to 90 billion euros (110 to 123 billion dollars).

On Monday the euro jumped as high as 1.3786 dollars before falling under 1.36 dollars as optimism over Ireland switched to fears of contagion.

"We're still concerned about Portugal, we're still concerned about Spain, we're still concerned about Italy," said Phil Flynn, energy analyst at PFGBest. "The bailout on the one hand was a positive thing but ... I think the markets are still a little bit nervous."

The euro has faced heavy selling pressure in recent weeks due to the debt woes of Ireland and other struggling eurozone nations such as Portugal and Spain.

The Irish bailout -- the second emergency rescue within the eurozone this year -- is aimed at cleaning up Ireland's devastated banking sector and slashing the country's huge public deficit.

It comes six months after a 110-billion-euro EU-IMF rescue package for Greece.

-- Dow Jones Newswires contributed to this story --

© 2010 AFP

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