* 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 []
(Adds retail sales data, 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 risk appetite improved and investors looked beyond
Irish debt worries to signs of a macroeconomic pick-up.
U.S. crude <CLc1> rose 63 cents to $85.51 a barrel by 1422
GMT while ICE Brent futures <LCOc1> rose 87 cents to $87.21.
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.
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. []
Oil prices 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. []
Amrita Sen, commodities analyst at Barclays Capital said the
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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http://graphics.thomsonreuters.com/F/11/CMD_LFRCSTX1110.gif
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FIRM FLOOR
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.
The negative correlation between oil and the dollar has also
temporarily broken down, suggesting that oil is instead focusing
on its own 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.
(Additional reporting by Isabel Coles in London and Rebekah
Kebede in Perth; editing by William Hardy)
