* U.S. oil set for first small weekly rise in three weeks
* Pressure on Portugal, Spain as euro zone crisis widens
* Euro <EUR=> falls 1 percent versus dollar to two-month low
(Updates detail, prices)
By Christopher Johnson
LONDON, Nov 26 (Reuters) - U.S. oil prices fell towards $83
per barrel on Friday as Europe's debt crisis pushed the euro to
a two-month low against the dollar and as investors worried
about tensions in Korea.
European officials denied as "absolutely false" reports on
Friday that Portugal was under pressure to seek a bailout and
Spain ruled out needing help to manage its finances, despite
fears of a spreading euro debt crisis. []
The dollar index <.DXY> hit a two-month high, while the euro
<EUR=> extended losses, shedding 1 percent on the day and
falling to a two-month low against the U.S. currency as
peripheral euro zone debt worries intensified. []
U.S. crude for January <CLc1> looked set for a small -- 1-2
percent -- weekly rise after posting the largest daily gain in
four months on Nov. 24 on positive U.S. economic data.
The contract fell $1.08 from its pre-Thanksgiving close to a
low of $82.78 before recovering to around $83.70 by 1445 GMT.
ICE Brent futures <LCOc1> for January were down 50 cents at
$85.60 per barrel.
The situation in the Korean peninsula was 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 towards war.
[]
"WEAK FUNDAMENTALS"
"The euro is down again, equity markets are nervous and oil
has been an outstanding outperformer recently," said Eugen
Weinberg, commodities analyst at Commerzbank in Frankfurt.
"I wouldn't be surprised if the oil price drops from here
over the next few days because the recent rise hasn't been based
on fundamental factors. The supply-demand situation is weak."
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For a graphic of euro zone struggles with debt, click:
http://r.reuters.com/hyb65p
For a graphic comparing euro zone peripheral economies:
http://r.reuters.com/zem66q
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Oil and other commodities often move inversely to the dollar
because they are priced on many international markets in the
U.S. currency. The dollar is also seen by many as a safe haven.
China may step up measures to curb accelerating inflation
following a recent crackdown on commodity prices in the world's
second-largest oil consumer.
China has intervened to control fast-rising consumer prices,
raising widespread market talk of an impending interest rate
rise, reinforced by an actual increase in banks' required
reserve ratios last Friday. []
On Thursday, the country's top economic planner said a
crackdown on commodity prices contributed to a widespread fall
in futures in the last two weeks. []
China's commodities exchanges have announced measures to
raise margin requirements and widen daily price movement limits
to curb speculation. []
Separately, India has said it will step up crude imports by
over 500,000 barrels per day (bpd) in the next fiscal year to
feed new refineries and fill up storage tanks. []
(Additional reporting by Florence Tan in Singapore; editing by
Sue Thomas)
