Oil inches up after big jump

By Zaida Espana

LONDON (BestGrowthStock) – Oil inched up in paltry trade on Thursday, extending its biggest gain in four months as the dollar edged lower, but ongoing concerns about the euro zone and Chinese inflation threatened to limit gains.

U.S. crude for January delivery rose 32 cents to $84.18 a barrel by 1900 GMT, after plumbing lows of $83.45 earlier. Total New York Mercantile Exchange crude trade came to just 48,000 lots, less than a tenth its average this year. All trade on Thursday will be combined into Friday’s official session.

ICE Brent rose 41 cents to $86.25. Total trade of just over 100,000 lots was about a quarter of the norm.

After falling sharply two weeks ago, oil prices found strong technical support at around $80 a barrel, setting the stage for Wednesday’s 3.2 percent rally on pre-holiday short covering spurred by inventory data that was less bearish than feared and upbeat U.S. weekly jobs and consumer spending data.

“Technically, the action of the last two days definitely print out a very strong defense of $80.50 a barrel as a support,” Petromatrix’ Olivier Jakob said in a note.

Continued worries about the ability of peripheral euro-zone members to manage their debt weighed on the euro, which remained close to a two-month low even after staging late gains that pulled the dollar lower amid corporate buying.

In Europe, senior officials dismissed suggestions by some commentators that the single currency area could break up. German Chancellor Angela Merkel said she was more confident than earlier this year that the European Union will emerge stronger from the current crisis.

But German government bonds fell, pressured in part by the possibility of further euro-zone bailouts, although the European Commission said there were no discussions on financial aid for more countries after Ireland asked for help.


The dollar index (Read more about the global trade. ) slipped 0.21 percent, lending a measure of support, although the normal inverse relationship between oil and the greenback has weakened recently.

The average daily correlation over the last 25 days dropped to -30 percent on Thursday, the weakest in over a month.

“Once again yesterday, we saw a disconnect between the dollar and commodity prices in yesterday’s trading,” MF Global senior commodities analyst Edward Meir said.

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

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

(Additional reporting by Alejandro Barbajosa in Singapore; Editing by Keiron Henderson and Jan Paschal)

Oil inches up after big jump