Crude Oil Rises a Second Day on Optimism Over Fuel Demand, Irish Bailout

Oil rose for a second day in New York because of optimism fuel demand will rebound in the U.S. because of an improved economic outlook and as Ireland moved closer to a European Union-led financial bailout.

Futures were up 1.8 percent yesterday, paring the biggest weekly decline since September, after Ireland’s central bank governor said he expects the country to seek help, strengthening the euro and boosting commodities. Prices also gained as reports showed that the index of U.S. leading indicators rose for a fourth month and jobless claims gained less than forecast.

“We’ve been worried about two major issues in Ireland’s debt concern and Chinese rate rises,” said David Taylor, a market analyst at CMC Markets Ltd. in Sydney. “There was no news of any rate rise coming out of China which has helped the market a bit, but more importantly it looks like Ireland is going to accept a bailout.”

The December contract increased as much as 65 cents, or 0.8 percent, to $82.50 a barrel, in electronic trading on the New York Mercantile Exchange, and was at $82.28 at 11:24 a.m. Sydney time. Yesterday, it gained $1.41 to $81.85 a barrel after declining for four days. The more-actively traded January contract climbed 44 cents to $82.86. Prices are up 3.7 percent this year.

The U.S. reports provided “a little bit of optimism” in the economy, Taylor said. “The initial jobless claims were better than expected.”

Oil is down 3.1 percent this week because of Europe’s debt concern and amid speculation that China, the world’s biggest energy-consuming country, will raise interest rates.

Ireland Rescue

Irish Central Bank Governor Patrick Honohan said in an interview with state broadcaster RTE yesterday he expects the country to ask the EU and the International Monetary Fund for “tens of billions” of euros to rescue its banks.

Prices also rose as manufacturing in the Philadelphia region expanded in November at the fastest pace this year as orders, sales and employment surged.

An Energy Department report on Nov. 17 showed crude supplies unexpectedly fell 7.29 million barrels last week to 357.6 million. It was the biggest weekly decline since August 2009. Imports tumbled 2.8 percent to 7.86 million barrels a day, the lowest level since December.

Brent crude for January settlement rose $1.77, or 2.1 percent, to $85.05 a barrel on the London-based ICE Futures Europe exchange yesterday.