* European shares rise on easing euro zone debt worries
* U.S. retail sales up more-than-expected in October
* Technical charts show rebound above $86 []
(Updates throughout)
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 investors looked beyond Irish debt worries to signs
of a macroeconomic pick-up, but a strong dollar capped gains.
U.S. crude <CLc1> rose 32 cents to $85.20 a barrel by 1554
GMT while ICE Brent futures <LCOc1> rose 54 cents to $86.88.
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.
"Crude is trying to rebound after the drop on Friday, but the
stronger dollar is limiting the bounce as are concerns about
Europe and their effect on demand," said Phil Flynn, analyst at
PFGBest Research in Chicago.
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>
European shares rose on Monday, partly on easing concerns
about debt in euro zone countries such as Ireland, and helped to
boost oil market sentiment but worries remained. []
Oil prices briefly extended gains after sales at U.S.
retailers rose more than expected in October to post their
largest gain in seven months, providing further evidence that
the economy was regaining strength. []
PULLBACK
Amrita Sen, commodities analyst at Barclays Capital said the
recent oil price drop was exaggerated and the steep fall was not
justified by 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 growth in 2010 above 2
million barrels a day (bpd) and solid demand in 2011," said Sen.
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. []
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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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Analysts at Standard Chartered and Barclays Capital 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.
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.
(Additional reporting by Isabel Coles in London, Rebekah
Kebede in Perth and Robert Gibbons in New York; editing by
Keiron Henderson)
