* U.S. jobless claims fall, mixed housing figures
* Spain debt worries, fears of eurozone contagion weigh
* Markets re-evaluate fall in U.S. crude oil inventories
(Releads with US jobs data, adds new quotes, updates prices)
By Una Galani
LONDON, Dec 16 (Reuters) - Oil pared losses at around $88 a
barrel on Thursday after data showed a fall in U.S. jobless
claims but sentiment remained tempered by mounting concerns over
the debt-crisis in the eurozone.
U.S. jobless claims dipped for a second week, suggesting
growth in the labour market of the world's largest oil consuming
nation but data on home construction showed the sector remained
distressed. []
"I think the continuation of a drop in initial jobless
claims might suggest some easing in unemployment rate, but not
much. We've got a long way to go," said Fred Dickson, chief
market strategist at the Davidson Cos in Oregon.
Investors were cautious a day after Spain was warned by
Moody's that it faced a downgrade to its credit rating. European
leaders will begin a two-day meeting in Brussels on Thursday to
try and agree the next steps in tackling the crisis.
[]
Ratings agency Moody's said it did not expect Madrid would
have to follow Greece and Ireland and accept a bailout from the
European Union bailout, but it could not be ruled out.
[]
U.S. crude for January <CLc1> fell 17 cents to $88.45 a
barrel by 1445 GMT. ICE Brent <LCOc1>, which expires on
Thursday, dropped 8 cents to $92.12.
LONG WAY TO GO
"The net position is pretty much neutral at the moment, but
it seems to be reasonably supported around the $88 per barrel
mark," said David Taylor, an analyst at CMC Markets in Sydney.
The eurozone concerns also weighed on the dollar, which
traded down 0.2 percent against a basket of currencies.
A weaker dollar can often strengthen dollar-denominated oil
prices as it makes fuel cheaper for holders of other currencies.
Weakness in the greenback can also push investment out of
foreign exchange markets and into commodities.
Initial claims fell 3,000 to a seasonally adjusted 420,000,
the Labor Department said on Thursday, in line with forecasts,
while a separate report from the Commerce Department showed
housing starts rose 3.9 percent to a seasonally adjusted annual
rate of 555,000 units.
In a note to clients, Stefan Graber, an analyst at Credit
Suisse, also warned that the 9.85 million barrel plunge in
weekly U.S. crude oil stocks reported on Wednesday which drove
oil prices up $1 was seasonal, due to a sharp drop in imports,
and could be temporary. []
Government data on Wednesday also showed that inflation was
low, with consumer prices posting a mild gain. []
The U.S. futures regulator, the Commodity Futures Trading
Commission, also this week announced a postponement of
contentious reforms that will limit the positions any one
investor can hold in commodity markets. []
(Additional reporting by Rebakah Kebede; editing by James
Jukwey)
