* China raises banks' reserve requirements by 50 bps
* Eyes on Ireland's expected bailout package
* Price volatility as NYMEX Dec crude contract expires
(Updates prices, quotes)
By Zaida Espana and Isabel Coles
LONDON, Nov 19 (Reuters) - Oil prices remained above $82 a
barrel on Friday, recovering from a brief dip after China
increased banks' reserve requirements by 50 basis points for the
second time in two weeks.
By 1118 GMT, U.S. crude oil futures <CLc1> were up 45 cents
at $82.30 a barrel. Prices briefly touched intra-day lows of
$81.54 a barrel after the news and were down from earlier highs
of $82.75 a barrel.
This marks the second time in two weeks that China has
increased banks' reserve requirements, and the move is widely
expected to be a precursor to an interest rate increase.
"I would think the impact is limited as it's not an interest
rate increase but just a hike of minimum reserve requirement; so
this is not an increase in borrowing costs but a withdrawal of
excess liquidity," Commerzbank analyst Carsten Fritsch said.
"Only when they in fact do hike interest rates, this will
have a more negative impact on oil."
Expectations of a rate increase rose after a report in a
Chinese newspaper suggested that Friday could be a convenient
time to raise rates before banks settle accumulated interest on
the 20th day of the month. [] []
Bache Commodities analyst Christopher Bellew said an
interest rate increase would be positive for commodities in the
long term.
"Personally I think anything that acts a gentle brake on the
runway growth in China will be a very good thing in the longer
term," he said. "And if it causes commodity prices to fall, it
will only be in the short term. In the longer term, China will
be the reason for the next rally."
IRELAND DEBT WOES EASE
North Sea benchmark ICE Brent crude futures <LCOc1> traded
55 cents firmer at $85.60 a barrel by 1120 GMT, having earlier
risen $1.10 to $86.15 a barrel on hopes debt-ridden Ireland will
obtain a bailout loan from the European Union and the IMF to
shore up its banks.
"The announcement of some type of financial assistance for
Ireland seems imminent," Gain Capital Forex.com senior
strategist Daniel Hwang said in a note. "A resolution before end
of week is likely to see risk sentiment improve and help keep
oil prices supported above the $80 per barrel level."
[]
Analysts said that further expected clarity about Ireland's
debt woes has spurred risk appetite among investors, which has
supported oil prices. The euro <EUR=> edged up versus the
dollar.
"There is a return of risk trades in the market, and oil is
benefitting," Commerzbank's Fritsch said. "Worries about the
(euro zone) debt crisis seem to be easing somewhat today."
VTB Capital oil analyst Andrey Krychenkov said that while
risk aversion has receded, investors remain concerned about
Spain and Portugal.
"Yesterday risk aversion receded, but in reality it doesn't
make things better. People are starting to get concerned about
Spain and Portugal," he said. "Really, it's still trading on the
back of a slight euro rebound."
U.S. Federal Reserve Chairman Ben Bernanke countered
criticism of the Fed's quantitative easing programme in remarks
prepared for the European Central Bank conference.
The ECB's president, Jean-Claude Trichet, will deliver a
keynote address at 1415 GMT.
No major economic indicators are due on Friday.
(Additional reporting by Osamu Tsukimori in Tokyo and Ikuko
Kurahone in London; editing by Jane Baird)
