* Irish minister denies EU rescue package talk
* Technical charts show rebound above $86 []
* Coming Up: U.S. retail sales; 1330 GMT
(Recasts, changes dateline to LONDON)
By Emma Farge
LONDON, Nov 15 (Reuters) - Oil rebounded above $85 a barrel
on Monday after falling sharply from a more than two-year high
last week as risk appetite improved and investors looked beyond
Irish debt worries to better fuel demand fundamentals.
U.S. crude <CLc1> rose 53 cents to $85.41 a barrel by 1038
GMT while ICE Brent futures <LCOc1> rose 67 cents to $87.01.
On Friday, U.S. crude prices fell nearly $3 from a 25-month
high above $88 a barrel in a broad commodities sell-off prompted
by concerns about Irish debt and talk of a possible Chinese
interest rate hike.
An Irish minister reiterated a denial on Monday that Ireland
was in direct discussions about a European Union bailout
package, but said "continuous talks" were taking place.
[]
Some analysts said the steep price retracement was
exaggerated and not justified by better demand data.
"There are worries about European debt and about a China
rate hike but any pullback will be short-lived...The
International Energy Agency sees demand in 2010 above 2 million
barrels a day (bpd) and solid demand in 2011," said commodities
analyst Amrita Sen of Barclays Capital.
The IEA on Friday raised its 2010 oil demand growth forecast
by 190,000 bpd to 2.34 million bpd from its previous monthly
report on stronger demand in both China and industrialised
economies. []
Better consumption has prompted a drawdown in oil stocks
held on tankers at sea and is now starting to eat into
inventories on land.
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For a graphic on 2011 and historical demand forecasts, see:
http://graphics.thomsonreuters.com/F/11/CMD_LFRCST1110.gif
http://graphics.thomsonreuters.com/F/11/CMD_LFRCSTX1110.gif
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FIRM FLOOR
Analysts said they expect oil prices to now stabilise at
near $85 a barrel, leaving levels significantly above the range
between $70-$80 where they have mostly traded for the past year.
"I don't think it's going to drop. I think there's quite a
firm floor now in the oil price," said Helen Henton, head of
energy and environment research at Standard Chartered.
The negative correlation between oil and the dollar has also
temporarily broken down, suggesting that oil is instead focusing
on its own improving fundamentals.
The dollar index hit a six-week high on Monday in a move
which would ordinarily weigh on oil prices since it deters
investors looking for a cash hedge and makes commodities more
expensive for holders of other currencies. <.DXY>
"We've seen on quite a few days now oil and the dollar
strengthen. Oil is reasserting its fundamentals," said Sen.
A stimulus plan by the U.S. Federal Reserve to buy $600
billion in Treasury bonds to help speed economic growth has
helped underpin strength in oil this month.
Traders will later look to October U.S. retail sales at 1330
GMT for further signs of the pace of economic recovery in the
world's top oil consumer.
U.S. growth showed tentative signs of improving last week as
jobless benefit claims hit a four-month low.
(Additional reporting by Isabel Coles in London and Rebekah
Kebede in Perth; editing by Keiron Henderson)
