Oil slips as dollar up on euro zone woes and Korea

By Robert Gibbons

NEW YORK (BestGrowthStock) – Oil prices slipped on Tuesday in choppy trading as fears of an escalating euro zone crisis and a North Korean attack on a South Korean island triggered a rally in the dollar, though buyers returned when oil fell to a session low near $80, which limited losses.

The dollar index (Read more about the global trade. ) (.DXY: ) posted its strongest rise in over a month as uncertainty over Ireland’s willingness to adopt an austerity budget threatened to deepen the political crisis and after North Korea fired artillery at South Korea in one of the heaviest attacks since the 1953 cease fire.

“Markets are under pressure on North and South Korea fighting, as there seems to be a flight to dollars. Concerns about Ireland debt didn’t go away. So far crude has held the $80 area,” said Tom Bentz, broker at BNP Paribas Commodity Futures Inc in New York.

Oil bounced off lows and briefly turned positive as many traders were cautious about being short ahead of the U.S. Thanksgiving holiday on Thursday.

U.S. crude oil for January delivery fell 49 cents to settle at $81.25 a barrel. Oil bounced from an early intraday low of $80.28 and total U.S. trading volume rose from Monday, but remained 21 percent below the 30-day average.

In London, ICE January Brent crude fell 71 cents to settle at $83.25 a barrel.

“We are concluding that a portion of today’s strong recovery was prompted by a renewed entry of speculative capital back into the long side following the liquidation phase of the past couple of weeks,” Jim Ritterbusch, president at Ritterbusch & Associates, wrote in a note.

After weeks of whipsaw trading amid expectations over the Federal Reserve’s quantitative easing policy, then fears of Chinese monetary tightening and concerns about Europe, oil prices have traded in a narrow band the past five days, with volumes slumping as the year-end approaches.

The European Union urged Ireland to adopt an austerity budget in order to receive an EU/IMF bailout.

German Chancellor Angela Merkel said Ireland’s crisis was different to Greece’s but just as worrying and the euro was in an “exceptionally serious” situation.

The euro plunged to a seven-week low against the dollar and fell 2 percent versus the yen on growing worries the euro zone’s debt crisis could spread beyond Ireland. (USD/: )

The EU situation and the Korean incident overshadowed reports showing the U.S. economy grew faster than previously estimated in the third quarter, though existing home sales fell more than expected in October.

Prices showed little reaction to the release of minutes from the Fed’s November policy meeting, which showed officials considered a number of options before settling on buying $600 billion in Treasuries.

World equities also fell while 10-year Treasury futures rose as the tensions between the two Koreas added to global economic worry. (MKTS/GLOB: ) (US/: )

OIL INVENTORIES

After oil prices received some support from the expectations that weekly oil inventory reports would show lower crude stocks, U.S. crude stocks were reported to have unexpectedly increased 5.2 million barrels on rising imports in the week to November 19, industry group the American Petroleum Institute reported late on Tuesday. (API/S: )

The API said gasoline stocks fell 499,000 barrels and distillate stocks fell 311,000 barrels, the API said.

Crude prices extended losses slightly after the release.

U.S. crude oil stockpiles were expected to have fallen 2.1 million barrels in the week to November 19, according to a Reuters analyst survey. (EIA/S: )

The U.S. Energy Information Administration’s stocks data is set for release on Wednesday at 10:30 a.m. EST (1530 GMT).

The gasoline crack spread narrowed for a second day on Tuesday, falling to $5.96 intraday and U.S. gasoline futures also remained under pressure.

“All the refinery restarts in New York Harbor area still putting pressure on products, mostly RBOB (gasoline),” said Bentz.

(Additional reporting by Gene Ramos in New York, Christopher Johnson in London and Florence Tan in Singapore; Editing by David Gregorio)

Oil slips as dollar up on euro zone woes and Korea