By Sherry Su Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Crude futures continued to test fresh 26-month highs in Europe Tuesday with benchmark light, sweet crude in New York breaking $90 a barrel, partly due to a weaker U.S. dollar and rising stock markets. Hopes the Irish emergency budget will pass through lifted equities markets in Europe, and also pushed the euro higher against the dollar. The rise in crude futures was due to "the strength of the euro, firmer equities, and a continuation of the bull trend," said Glen Ward, an analyst at London Capital Group. At 1130 GMT, the front-month January Brent contract on London's ICE futures exchange is up $1.03 at $92.48 a barrel. The front-month January light, sweet crude contract on the New York Mercantile Exchange is trading $1.02 higher at $90.40 a barrel. The ICE's gasoil contract for December delivery is $8.00 higher at $774.00 a metric ton, while Nymex gasoline for January delivery is up 1.81 cents at $2.3598 a gallon. The event in Ireland is a key element in financial markets. It is widely believed that the Irish government will get just enough support to ensure that its EUR6 billion of spending cuts get parliamentary approval. Passage of the budget is needed before the debt rescue package from the European Union and the International Monetary Fund can be implemented. "A positive political reception could give room for optimism, a softer dollar and a stronger oil price," said Bjarne Shieldrop, chief commodity analyst of Stockholm-based consultancy SEB Commodity Research. Traders also kept a close eye out for the upcoming U.S. weekly oil inventories data, due 1530 GMT Wednesday. Crude oil inventories are expected to fall by 1.3 million barrels in the week ended Dec. 3, according to the mean of forecasts by six analysts surveyed by Dow Jones Newswires. Gasoline inventories are seen rising by 400,000 barrels, while stocks of distillates, which include heating oil and diesel, are expected to fall by 700,000 barrels, the survey showed. However, there are some uncertainties ahead. China, the biggest contributor of global oil demand growth, is likely to raise interest rates over the coming weekend to keep inflation in check, according to local media. Traders are concerned that higher interest rates might keep a lid on China's domestic consumption, in turn damping its demand for oil. Meanwhile, the Organization of the Petroleum Exporting Countries is scheduled to meet in Quito, Ecuador Saturday. Several oil ministers have said OPEC won't alter output quota at the meeting. Ali Naimi, the oil minister of Saudi Arabia, said earlier the kingdom will meet increased demand from customers. "Saudi Arabia has for now provided no hints that it might look at a supply increase but we are heading into the weekend at the top of the new Naimi range," said Olivier Jakob, managing director of Swiss consultancy Petromatrix. "On a price and fundamental basis, Naimi would have a justification for an official increase of the quota but that is something difficult to bet-on given the history of OPEC pushing for the last buck," he said.

Source