LONDON: Oil retraced part of a steep four-session drop on Thursday as worries about Ireland’s debt crisis eased and a sharp crude inventory drawdown in top consumer the United States propped up prices.
US December crude contract was up $1.35 or 1.68 percent to $81.79 per barrel at 1028 GMT after being briefly lifted as high as 2 percent up. ICE Brent was also 1.39 percent up to $84.67 a barrel.
Concerns about the euro zone’s fiscal health and a potential interest rate hike in China had knocked about 8 percent off a 25-month high last week, sending oil to a low of $80.06 on Wednesday, its weakest since Oct. 20.
But Dublin’s agreement to work with a European Union-IMF mission to shore up its troubled banking sector soothed investors’ worries. Ireland’s central bank chief said on Thursday he expected the country to receive tens of billions of euros in loans from European partners
"For now the market seems to be increasingly relaxed that measures are being put in place (in Ireland)," said Jim Reid, a strategist at Deutsche Bank.
The euro rose on new-found optimism in the response to Ireland’s debt crisis, while the greenback slid about 0.6 percent against a basket of currencies.
The remarks of an academic advisor to the People’s Bank of China also quelled speculation about a raise in Chinese interest rates, which had put pressure on the oil price.
Zhou Qiren said China should not rely solely on interest rate rises to curb inflation adding that the government must take steps to tackle the supply-side strains that have been a key factor in pushing up consumer prices.
Inventories, US data
US crude stockpiles dropped the most in more than 14 months last week, as fewer imports and higher refining rates dented inventories, a weekly government report from the Energy Information Administration showed on Wednesday.
Inventories unexpectedly fell by 7.29 million barrels to 357.6 million barrels in the week to Nov. 12, while crude imports fell 226,000 barrels per day (bpd) to 7.83 million bpd.
Stocks of oil products also fell, although more closely in line with analyst expectations.
Gasoline fell by 2.66 million barrels, versus forecasts for an 800,000-barrel draw, while distillate stocks declined 1.11 million barrels compared with a projected 2.2 million drop.
But crude inventories at the key Cushing, Oklahoma hub rose 1.27 million barrels to 33.07 million, depressing the value of US crude relative to European benchmark Brent.
Cushing is the delivery point for the New York Mercantile Exchange’s benchmark West Texas Intermediate (WTI) crude futures.