Brent oil slips, global economy worry persists

Wed Oct 17, 2012 8:38am EDT
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By Simon Falush and Alice Baghdjian

LONDON (Reuters) - Brent crude oil fell on Wednesday as worry about the global economy overshadowed relief that Spain avoided a ratings downgrade and optimism prompted by firm U.S. corporate results.

December Brent fell 36 cents to $113.64 a barrel by 1207 GMT. U.S. oil for November gained 21 cents to $92.30.

The November Brent contract, which expired on Tuesday, closed 73 cents lower at $115.07, while December settled 40 cents lower at $114.00

Brent gained in early trade after Moody's Investors Service affirmed its investment grade rating on Spain, helping to ease investor worries that the crisis in the euro region is worsening.

However sentiment quickly reversed, with investors reluctant to buy into oil as concern about the demand outlook remained in focus, and crude stayed near the lower end of the day's trading range.

"We still have fairly low demand and still fairly high production, especially from the OPEC side," said Andy Sommer, oil market analyst with EGL in Dietikon, Switzerland.

"From that mixture, when you look at demand-supply balance in the world and look at latest inventory numbers for oil, you see that the picture is still a bit bleak," he said.

Oil was supported by supply concerns, as the European Union slapped fresh sanctions on major Iranian state companies in the oil and gas industry and strengthened restrictions on the central bank.   Continued...

A man fills his truck up with gas at a gas station in Santa Monica, California, May 28, 2008. REUTERS/Lucy Nicholson