Brent extends losses on Eurozone woes

Thu Nov 17, 2011 5:33am EST
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By Jessica Donati

LONDON (Reuters) - Oil prices diverged further on Thursday as a clash in Europe over the role of the European Central Bank weighed on Brent, while U.S. crude was steady after rising 3 percent the previous session.

The spread between U.S. crude oil and Brent CL-LCO1=R narrowed to less than $8 a barrel, touching a high of $7.88 a barrel during the early hours of trade.

The differential has plummeted from a record $28 a barrel in October, after rarely moving above a few dollars in previous years, as U.S. prices have soared on a run of positive economic data and plans to reverse a pipeline to ease a U.S. oil glut.

More clouds gathered over the outlook for Europe as France and Germany clashed over whether the troubled region's bailout fund should be able to borrow from the ECB.

"The concern is about austerity measures throughout Europe, with the follow-through for Brent being a drop in demand," said David Morrison, market strategist at GFT Global.

"Instead the prevailing view is that the U.S. will escape the difficulties in Europe and the rest of the world, which is ludicrous," he added.

Brent crude was down $1.23 at $110.65 a barrel at 1000 GMT, while U.S. crude was 8 cents lower at $102.51 a barrel, holding gains after surging more than 3 percent the previous session.

ECONOMY   Continued...