SINGAPORE, Jan 7 (Reuters) - Oil was trading near a 2-1/2
week low on Friday, headed for the steepest weekly drop in
seven weeks as a stronger dollar sapped the appeal of
commodities for investors jittery about euro-zone credit issues.
FUNDAMENTALS
* U.S. crude prices have had a turbulent first week of the
year, seesawing in a range of almost $5 after touching a
27-month high of $92.58 a barrel on Monday. Front-month
February crude was down 8 cents at $88.30 at 0111 GMT, having
touched $87.85 on Thursday, the lowest intraday price since
Dec. 20.
* U.S. crude <CLc1> is headed for a weekly decline of
about 3 percent, biggest drop since the week ended Nov. 21.
* U.S. benchmark West Texas Intermediate (WTI) for
February is trading about $6 below the equivalent ICE Brent
front-month contract as investors migrate towards the European
marker, a more representative price for the global fundamental
balance.
* Strength in price, trading volumes and market structure
of Brent crude has helped to lure some of the big investment
money that has typically favoured U.S. oil futures -- a trend
that is likely to gather momentum. []
* On Thursday, Brent's premium to U.S. crude touched
$6.55, the widest level since it hit $6.57 on May 13, 2010. If
the spread pierces that seven-month high, it would be the
widest spread since Feb. 12, 2009, when it dropped below $10
on an intraday basis. (Graphic: http://link.reuters.com/taj25r)
* Brent's strength has been spurred by continued strong
Asian demand and robust European product markets, while U.S.
crude has been pressured by an extended build in stockpiles at
the key delivery hub in Cushing, Oklahoma, despite a drop in
national stocks over the last five weeks.
* Revised forecasts in a Reuters poll showed expectations
that December U.S. nonfarm payrolls jumped 175,000 after
November's small gain of just 39,000. []
MARKETS NEWS
* Thursday saw further pressure on oil from gains in the
dollar against the euro, which weighed on dollar-denominated
commodities. Recent U.S. data has painted a rosier economic
picture in contrast to worries about the euro zone's sovereign
debt crisis. []
* Japan's Nikkei average dipped 0.2 percent on Friday
after U.S. stocks slipped with soft retail sales and a sharp
rise in the dollar leaving investors edgy before December's
U.S. employment report.
DATA/EVENTS (GMT)
1100 Germany Industrial output Nov 2010
1330 U.S. Unemployment Rate Dec
1330 U.S. Non-farm payrolls Dec
1440 U.S. ECRI inflation Dec
1530 U.S. Commitments of Traders Jan 4
1530 U.S. ECRI index Weekly USECRW=ECI>
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(Reporting by Alejandro Barbajosa; Editing by Himani Sarkar)
