Oil edges lower as European debt concerns linger

Oil edges lower as European debt concerns linger

Singapore: Oil edged lower on Thursday, after rising more than 3% a day earlier on strong US macro-economic data, as concerns about European debt lingered across financial markets.

A surprise rise in US crude stocks last week also pressured prices. US crude for December shed 9 cents to 83.77 a barrel at 8:55am, after rising $2.61 or 3.2% on Wednesday, the biggest%age gain in four months. ICE Brent declined 18 cents to $85.66.

“At moment the tempo is more upbeat than when we started the week, but nothing has gone away," said Geoff Howie, sales and markets strategist at MF Global in Singapore.

“The biggest fear is that if there is volatility in European markets, that will derail the inroads that theUS has made this year, like it did in May."

Ireland unveiled an ambitious austerity plan to tackle its debt crisis and secure an international bailout, but officials gave mixed messages on whether its debt crisis could spread to other euro zone members or even endanger the common currency.

Oil tumbled to 2010 lows under $65 in May as the Greek debt crisis dampened confidence about the global economic recovery. They rebounded to a two-year high of $88.63 on 11 November.

Earlier this week, prices dropped to near $80 after North Korea’s deadly artillery barrage targeting a disputed South Korean island that boosted the value of the dollar and reduced the appetite for riskier commodity assets.

“We still have to see the full response through to the Korean incident," Howie said.

South Korean President Lee Myung-bak called an emergency meeting on Thursday to contain the economic impact of an artillery attack by North Korea, while the United States asked China to rein in Pyongyang.

Initial jobless benefits claims in theUS fell to their lowest level in more than two years last week while consumer spending rose for a fourth straight month in October, reports showed on Wednesday, fueling hopes the economic recovery is strengthening.

The New York Mercantile Exchange (NYMEX) is combining trades for 25 November and 26 November into one single trading session because of Thursday’s Thanksgiving holiday in theUS

US crude oil stockpiles rose 1.03 million barrels in the week to Nov. 19 as crude imports jumped by more than a million barrels per day, theUS Energy Information Administration said on Wednesday.

Analysts polled by Reuters had expected crude stocks to fall 2.1 million barrels, but the jump reported by the EIA was much less than the American Petroleum Institute’s report showing stockpiles increased 5.2 million barrels.

Gasoline stocks rose 1.91 million barrels, the EIA said, against expectations for a 600,000-barrel draw, and distillate stocks fell 541,000 barrels, much less than analysts’ expectations for a larger 1.2 million-barrel draw.