U.S. oil dips on euro woes in thin volume trade

By Robert Gibbons

NEW YORK (BestGrowthStock) – U.S. oil prices edged lower in light post-holiday trading on Friday, pressured as Europe’s debt crisis pushed the euro to a two-month low against the dollar but with pipeline and refinery snags and geopolitical tensions helping limit oil’s losses.

Oil prices seesawed as U.S. crude trading volume totaled only 243,802 lots, well below the 465,481 lots traded on the 2009 post-Thanksgiving Friday and 62 percent below the 30-day average.

The dollar index (Read more about the global trade. ) (.DXY: ) hit a two-month high and the euro fell (Read more about the trembling euro. ) to a two-month low against the greenback as euro zone debt worries intensified. (FRX/: )

Commodity-related shares led U.S. equities lower, as investors unloaded risky assets on worries that euro-zone debt problems may continue to spread. (.N: )

“It was a relatively strong performance for crude given the rally in the dollar and the slip in the S&P. A bullish market sentiment has investors focusing on bullish news and ignoring bearish news,” said Tim Evans, energy analyst at Citi Futures Perspective in New York.

U.S. crude oil for January delivery fell 10 cents to settle at $83.76 a barrel, well above its $82.78 low.

Front-month crude futures ended $2.25, or 2.76 percent, higher on the week, snapping a string of two weekly losses.

The front-month crude price has not dropped below $80 since October 20 and has seesawed after reaching a 25-month peak at $88.63 on November 11.

In London, ICE January Brent crude fell 52 cents to settle at $85.58 a barrel.

As the euro was kept under pressure and the dollar strengthened amid the euro zone debt crisis, European officials denied reports on Friday that Portugal faced pressure to seek a bailout and Spain ruled out needing help to manage its finances.

A stronger dollar typically pressures oil prices as it boosts the value of greenbacks paid to producers for dollar-denominated oil while making it more expensive for consumers with other currencies.

“We viewed the ability of the crude market to maintain Wednesday’s strong 3 percent price gains as impressive given today’s two-month lows in the euro and the significant weakness in today’s equity markets,” Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois, said in a note.

Helping limit oil losses on Friday was news a power outage forced Enbridge Inc (ENB.TO: ) to cut flows on its 670,000 barrel-a-day, Line 6A, Canada-to-U.S. crude oil pipeline by about a third, according to market sources.

U.S. gasoline futures ended lower, but also seesawed and posted intraday gains amid refinery snag news as Tuesday’s December refined products contract expirations approached.

Brokers and traders also pointed to geopolitical concerns limiting oil losses.

The Korean peninsula remained tense as China warned against military acts near its coast ahead of U.S.-South Korean naval exercises that North Korea, days after shelling a South Korean island, said risked pushing the region to war.

Chinese Foreign Minister Yang Jiechi later said China was determined to prevent a repetition of this week’s violence after meeting North Korea’s ambassador to Beijing.

While China wrestled with geopolitical tensions, the country’s top economic planning body, the National Development and Reform Commission, on Thursday said a crackdown on commodity prices had contributed to a widespread fall in futures in the last two weeks.

China’s commodities exchanges have announced measures to raise margin requirements to curb speculation.

Adding to investors’ caution, Saudi Arabia, with elderly King Abdullah in the United States after surgery, said it had captured al Qaeda militants in recent months who were raising money and recruiting members.

(Additional reporting by Christopher Johnson in London and Florence Tan in Singapore; Editing by Dale Hudson and Sofina Mirza-Reid)

U.S. oil dips on euro woes in thin volume trade