Oil rises above $84 on EU rescue deal for Ireland

Oil prices rose above $84 a barrel Monday as investors were encouraged by a European Union bailout plan for Ireland and awaited key U.S. economic data.

By early afternoon in Europe, benchmark oil for January delivery was up 58 cents to $84.34 a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, the contract rose as high as $85.03. On Friday, it fell 10 cents to settle at $83.76.

The EU agreed Sunday to give Ireland 67.5 billion ($89.4 billion) in loans and outlined new rules for future emergencies in an effort to restore faith in the euro.

"The EU rescue package for the Republic of Ireland ... is helping risk appetite to rise and boosting investor demand for commodities," said a report from analysts at Commerzbank in Frankfurt.

Still, with worries remaining about the financial crisis affecting other EU countries like Portugal or Spain and continuing tensions between North and South Korea, investors could soon turn more cautious.

"We do not believe the latest price gains are sustainable. Another price slump in the direction of $80 is more likely than another rise in the direction of $90," Commerzbank said.

Traders will be closely watching Friday's U.S. unemployment numbers for signs more Americans are going back to work as the economy slowly recovers from last year's recession.

"The important November employment report could prove pivotal in determining the course of the oil trade across December," Ritterbusch and Associates said in a report.

Crude advanced despite a strengthening dollar, which makes oil more expensive for investors holding other currencies.

The euro fell to $1.3187 on Monday from $1.3237 late Friday in New York, while the British pound slumped to $1.5575 from $1.5602 .

In other Nymex trading in December contracts, heating oil rose 1.94 cents to $2.3356 a gallon and gasoline added 1.69 cents at $2.2272 a gallon. Natural gas gained 3.7 cents to $4.436 per 1,000 cubic feet.

In London, Brent crude advanced 45 cents to $86.03 a barrel on the ICE Futures exchange.

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Associated Press writer Alex Kennedy in Singapore contributed to this report.