December 11, 2014 / 3:58 AM / 4 years ago

Oil steadies on U.S. economic data; U.S. crude near $60 support

NEW YORK (Reuters) - Oil prices stabilized near five-year lows on Thursday as robust U.S. consumer spending data boosted investor optimism about the world’s largest economy, while traders warned that a bottom for crude remained elusive after a six-month selloff.

A customer holds a nozzle to fill up his tank in a gasoline station in Nice, December 5, 2014. REUTERS/Eric Gaillard

Benchmark Brent oil remained below $65 a barrel while U.S. crude traded not far from the $60 support level in choppy trade.

U.S. consumer spending advanced at a brisk clip in November, Commerce Department data showed, as lower gasoline prices gave the holiday shopping season a boost.

Norway’s rate cut and speculation of more European stimulus helped steady the crude market after Wednesday’s 5 percent price drop, as did talk that some oil drillers were moving to cut exploration and production.

“For the moment at least, we’re focused on the positives of this oil drop rather than the negatives like deflation and freeze on investments in energy spending,” said Phil Flynn, analyst at the Price Futures Group in Chicago.

“That said, we’re not getting much of a bounce, considering how hard it has been sold off.”

Brent’s front-month contract was up 20 cents, or 0.3 percent, at $64.44 a barrel by 12:33 p.m. EST (1733 GMT). Earlier, it fell as low as $63.70.

Front-month U.S. crude futures were down 12 cents at $60.82, after coming within less than 10 cents of breaking below $60 support.

Brent and U.S. crude are down nearly 50 percent from June highs, when Brent was above $115 and U.S. crude above $107 a barrel.

On Wednesday, prices collapsed after U.S. crude inventories rose unexpectedly and OPEC’s most influential voice, Saudi Arabia’s oil minister, again shrugged off the idea of cutting output.

Some traders said prices could churn as market players speculate about possible OPEC output cuts if Algeria and Venezuela convince the group to hold an emergency meeting early next year. Some doubt the Saudis would agree to cut output even then.

“There’s nothing the rest of OPEC or the world could do to pressure the Saudis,” said Tariq Zahir, managing member at Tyche Capital Advisors in New York.

While low prices will discourage exploration and drilling in some places, he said, other producers who could still profit at lower prices may ramp up output to boost revenues through higher volume.

“If prices were to hit the low fifties, (some) non-OPEC members are likely to raise production, because the only way they can get more revenue is to sell more oil at such prices.”

Additional reporting by Alex Lawler in London and Adam Rose in Beijing; Editing by Michael Urquhart and David Gregorio

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