Crude Oil Hits $85 on Irish Bailout (USO)

Crude oil hit a two-week high early Monday morning, following a European Union-approved Irish rescue package. Crude oil futures hit $85 a barrel on hopes that European debt problems are temporarily resolved. U.S. crude oil for January delivery rose 1.5%, or $1.27, to a high of $85.03 a barrel before retracing back to $84.76. According to a Reuters report, "Finance ministers from the 16-nation euro zone, anxious to prevent euro debt concerns engulfing Portugal and Spain, 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." "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 toward growth assets" following the Fed's second round of quantitative easing, Barclays Capital analysts said in a report. Concerns about North Korea and South Korea could temper commodity prices in the near-term. The volatile North is known to shake the political foundation in order to make its points. The Reuters report notes that "Tensions between North and South Korea have mostly been bearish for the oil market because of the implications that war would have on demand at the heart of Asia's top consuming region. But other geopolitical events were having a mild bullish effect on the market, traders said." The United States Oil Fund ETF USO closed Friday at $35.97.