Oil dips on economic concerns, spread selling
By Matthew Robinson and Gene Ramos
NEW YORK (Reuters) - Oil fell on Friday as a bout of profit-taking following big moves in spreads this week overtook early euro zone optimism.
Oil gained early as the euro rose against the dollar on speculation the European Central Bank may start lending to the International Monetary Fund to bail out big euro zone economies. That gave a lift to commodities denominated in the greenback. <USD/>
U.S. crude dipped in early New York trade and Brent followed it into negative territory just before noon, as concerns about the euro zone and weak U.S. demand re-emerged added to selling pressure from the expiry of the December U.S. contract and profit-taking.
"(Prices) got a lift early on because the ECB was buying bonds, but I think there is some skepticism about how much leeway the ECB has to support the bond market that way," said Tim Evans, energy analyst for Citi Futures Perspective in New York.
In London, ICE Brent crude dipped 66 cents to settle at $107.56 a barrel, off the session high of $109.99.
Trade in the front-month December U.S. crude oil futures contract was light ahead of expiry at the settlement on Friday as volumes moved to the January contract. December U.S. crude slid $1.41 to settle at $97.41 a barrel, while January futures fell $1.26 to settle at $97.67 a barrel.
"Liquidations on the December contract and profit-taking ahead of the Thanksgiving holiday week pulled down U.S. crude futures," said Phil Flynn, analyst at PFGBest Research in Chicago.
The futures curve for U.S. crude, also called West Texas Intermediate, flattened and moved toward a contango structure in which prompt prices were discount to later months, a sign that concerns were easing about tight near-term supplies. WTI shifted from a contango to backwardation in late October on signs an oversupply of crude in the U.S. Midwest was easing. Continued...