* Dollar rally depresses stocks, commodities
* Oil outperforms stocks on weather, Gulf worries
* Reuters oil poll shows price estimates rise upwards
* Reuters OPEC survey shows slightly better compliance
(Updates detail, previous SINGAPORE)
By Christopher Johnson and Dmitry Zhdannikov
LONDON, Nov 29 (Reuters) - Oil lost upward momentum, after
rising to a two-week high on Monday, as a European Union rescue
plan for Ireland failed to calm persistent worries about the
health of other euro zone members.
As the euro weakened and the dollar rallied on worries about
a spreading crisis within the euro zone, stocks fell sharply.
Oil outperformed equities, supported by cold weather in Europe
and concerns about security in the Gulf.
U.S. crude for January <CLc1> traded broadly flat at $83.76
a barrel at 1502 GMT after rising 1.5 percent to a high of
$85.03 a barrel earlier in the day.
Oil has declined from a two-year high of $88.63 seen earlier
in November due to worries that euro zone debt problems could
keep a lid on growth and energy demand.
ICE Brent for January <LCOc1> rose 12 cents to $85.70 as the
dollar rose by nearly 1 percent against a basket of currencies
<.DXY> and the euro hit a two-month low. []
Finance ministers from the 16-nation euro zone unanimously
endorsed an emergency loan package of 85 billion euros ($115
billion) to help Dublin cover bad bank debts and bridge a huge
budget deficit. []
"In our opinion the bailout of Ireland will not be a
trend-changer until the markets have confidence that
Portugal/Spain are out of danger, and for now the Irish plan has
done nothing to weaken the CDS on Portugal or Spain," said
Olivier Jakob from Petromatrix.
Credit default swaps reflect the cost of buying protection
against a potential default by a borrower.
Some analysts noted that oil prices showed more resistance
than other assets classes, with U.S. stock index futures turning
negative on Monday []
"The southern European sovereign debt crisis would have to
take a severe turn for the worse to derail positive commodity
price trends that are finding strong support from improving
fundamentals and positive market sentiment towards growth
assets," Barclays Capital analysts said in a report.
Euro zone economic sentiment improved more than expected in
November, data showed on Monday. [] Later in the
week, the focus will shift to China's and European PMIs,
followed by euro zone GDP data and an ECB meeting on interest
rates followed by U.S. data on non-farm payrolls and
unemployment.
A Reuters November oil price poll showed that most analysts
were revising their price estimates upwards [], while a
Reuters survey of OPEC showed slightly better compliance with
production curbs []
GEOPOLITICAL RISKS
South Korean President Lee Myung-bak on Monday labelled
North Korea's artillery attack on a west coast island a crime
against humanity and said the South would retaliate against any
further provocation. []
Tensions between North and South Korea have mostly been
bearish for the oil market because of the implications that war
would have on demand, but other geopolitical events were having
a mild bullish effect on the market, analysts said.
Saudi Arabia's King Abdullah has repeatedly urged the United
States to attack Iran's nuclear installations, according to a
vast cache of U.S. diplomatic cables released on Sunday in an
embarrassing leak that undermines U.S. diplomacy.
[]
"Although this is unlikely to cause any immediate supply
disruption, the media reports once again push to the forefront
the constant geopolitical risk that the supply of oil is exposed
to," said James Zhang from Standard Bank.
King Abdullah, being treated in New York for a blood clot,
has started rehabilitation and his health is "very reassuring",
the kingdom's health minister said on Sunday. []
Jakob from Petromatrix said a cold spell in Europe was
supportive of the oil price but that temperatures in Chine have
been so far above normal. He noted that oil prices were back to
levels at the start of 2008 and more than double the start of
2009.
"While the economy and the oil fundamentals have greatly
improved from the start of 2009, we do believe that the global
economy is still weaker and that the oil supply system has
greater spare capacity than at the start of 2008," he said.
(Additional reporting by Alejandro Barbajosa; editing by
William Hardy and Jane Baird)
