* Ireland downgrade weighs, euro sheds gains, curbs oil
* German business sentiment at highest level since 1991
* U.S. economic indicators bolster optimism, oil
* Coming up: CFTC positions data at 3:30 p.m. EST Friday
(Recasts, updates market activity and prices and changes
dateline, previously LONDON)
By Robert Gibbons
NEW YORK, Dec 17 (Reuters) - Oil prices edged up on Friday,
seesawing near $88 a barrel as currencies fluctuated amid fresh
concerns about euro zone debt that helped limit gains in oil.
Refinery issues boosted U.S. gasoline futures <RBc1> and
cold weather lifted heating oil futures <HOc1>, joining a
report of supportive economic indicators to help keep crude oil
firm, brokers and analysts said.
Ratings agency Moody's slashed Ireland's debt rating and
put the country, along with Greece, on a negative outlook,
warning that further downgrades could follow. []
"After the market's rally above $90 (last week) it's trying
to consolidate below, waiting for a cue as to whether we're
going to see a year-end sell-off or whether more economic
optimism is going to push crude higher," said Gene McGillian,
analyst, Tradition Energy in Stamford, Connecticut.
U.S. crude for January delivery <CLc1> rose 17 cents to
$87.87 a barrel at 12:07 p.m. EST (1707 GMT), having bounced
off an $87.01 low before stalling after bouncing as high as
$88.52. A finish above $87.79 would post a weekly gain ahead of
the January contract's expiration on Monday.
Prices reached a 26-month high of $90.76 on Dec. 7.
"The recent long-side bias could likely be scaled back
somewhat, as hedge funds seek to close out both the quarter and
the year. This could result in prices working slightly lower as
we head into the year-end," said Edward Meir, a senior
commodity analyst at MF Global.
Technicals indicated crude could be set to slip to $85.41
over the next week, based on its wave pattern and a Fibonacci
retracement analysis. []
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Graph of four-week technical outlook on oil:
http://link.reuters.com/sab72r
Reuters Insider on commodities investment:
http://link.reuters.com/wyk52r
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ICE Brent crude for February <LCOc1>, in front-month
position after January contract's expiration on Thursday, rose
9 cents to $91.69 a barrel, also in choppy trading.
The euro extended losses against the dollar to hit a
two-week low after a drop below $1.32 triggered automatic sell
orders amid pressure on the currency after Moody's warnings
about Ireland. [] The dollar index <.DXY> was stronger, but
had seesawed.
Oil and dollar-denominated commodities often move inversely
to the dollar, with a stronger dollar typically pressuring oil
prices as it raises the value of greenbacks paid to producers
and raises the price of oil in markets using other currencies.
Moody's actions were viewed as an emphatic thumbs down on
European Union leaders' failure to resolve the region's debt
crisis and keep the contagion from spreading. []
But the broad concerns were tempered by news that German
business sentiment rose to its strongest level since 1991 in a
closely watched survey by the Munich-based Ifo think tank.
[]
Also keeping bulls hopeful was the view that the U.S.
economy is gathering steam as 2010 draws to a close, based on
data from two separate economic research firms on Friday.
The Conference Board's measure of leading economic
indicators rose 1.1 percent in November, the biggest rise since
March and the fifth straight monthly gain, while the Economic
Cycle Research Institute said its gauge of future growth rose
to its highest level since May. []
REFINED PRODUCTS STRENGTH
Cold weather in much of Europe and the U.S. Northeast --
the top heating oil market which is on track to have its ninth
coldest December since 1950 -- has propped up heating fuel
prices.
Last week's news that Hovensa LCC had shut a gasoline unit
at its St. Croix refinery in the U.S. Virgin Islands
[] and a unit upset at one of Sunoco's
Pennsylvania refineries boosted U.S. RBOB gasoline futures,
brokers said.
U.S. crude oil demand rose 6.5 percent in November versus a
year ago, the highest monthly rise in 2010, industry group
American Petroleum Institute said on Friday. []
Gasoline demand rose for he third consecutive month while
demand for distillates, which include heating oil and diesel
fuel, gained for the 10th month in a row, the API said.
(Additional reporting by Gene Ramos in New York, Una Galani in
London and Randy Fabi in Singapore; editing by Jim Marshall)
