Oil up above $82 in Europe after Ireland bank bailout strengthens euro

Oil prices rose above $82 a barrel Monday after Ireland agreed to a massive bailout of its troubled banking sector, boosting the euro and stemming investor fears that a debt crisis could spread across Europe.

By early afternoon in Europe, benchmark oil for January delivery was up 33 cents to $82.31 a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, it traded as high as $82.87. On Friday, the contract rose 44 cents to settle at $81.98.

Ireland said Sunday it would accept a European Union and International Monetary Fund loan whose terms, conditions and size would be negotiated in the coming weeks. News of the deal helped strengthen the euro, making crude, which is traded in dollars, cheaper for investors holding the European currency.

The euro rose to $1.3694 from $1.3673 on Friday, while the British pound was up to $1.5999 from $1.5973.

Some analysts expect recent signs that global oil consumption growth is improving will also help bolster crude prices.

“Oil prices should find support above $80, given the strength in underlying fundamentals,” Barclays Capital said in a report. “Recent data releases continue to show a phenomenal pace of recovery in global oil demand.”

Others, however, saw signs that current price levels would be hard to sustain.

“The recent crude price gains to $90 a barrel have again been a case of ‘tomorrow’s price today’ with the uplift dictated by future potential tightness rather than any immediate shortage of crude oil,” said a report from KBC Energy Economics.

Efforts by China to tighten monetary policy, such as higher bank reserve requirements, were also weighing on oil prices.

“At one point, one of these moves — and we suspect it will be an interest rate hike that will fit the bill — will trigger a substantial correction in commodity markets,” said Edward Meir at MF Global in New York.

In Nymex trading in December contracts, heating oil rose 0.77 cent to $2.2821 a gallon and gasoline gained 0.41 cent to $2.2001 a gallon. Natural gas was up 0.39 cent at $4.2030 per 1,000 cubic feet.

In London, Brent crude added 55 cents to $84.89 a barrel on the ICE Futures exchange.