* Dollar up on euro zone woes, weighing on oil, equities
* China equities drop amid fears of curbed growth
* U.S. Dec refined products to expire, adds to volatility
* Coming Up: U.S. API oil inventory report; 2130 GMT
(Recasts, updates prices and market activity, new byline
and changes dateline from previous LONDON)
By Robert Gibbons
NEW YORK, Nov 30 (Reuters) - Oil slipped on Tuesday as the
dollar hit an 2-1/2 month high against the euro on concerns
that Europe's debt crisis may widen and on worries over demand
in China as the No. 2 consumer seeks to brake energy demand
growth and cool inflation.
U.S. heating oil <HOc1> and gasoline <RBc1> futures fell
back as front-month December products contracts were set to
expire on Tuesday, weighing on crude. On Monday, cold weather
boosted distillates and tight New York Harbor supplies lifted
gasoline, helping crude prices rise.
U.S. crude oil for January delivery <CLc1> fell 62 cents to
$85.11 a barrel at 12:50 p.m. EST (1750 GMT), having earlier
slipped as low as $84.63. Even a close at that intraday low
would leave oil up nearly 4 percent for the month.
Total U.S. crude trading volume was about 305,000 lots
after midday in New York, 51 percent below the 30-day average.
In London, ICE January Brent crude <LCOc1> fell 53 cents to
$86.81 a barrel.
While U.S. economic data was mixed on Tuesday, reports
showing consumer confidence at a five-month high in November
and Midwest business activity growing faster than expected
helped curb oil losses, even as falling home prices
disappointed. []
"Better consumer confidence and Chicago PMI data helped
limit crude losses this morning," said Tom Bentz, broker at BNP
Paribas Commodities Futures Inc in New York
The dollar index <.DXY> against a basket of currencies
reached a more than two-month peak as the euro <EUR=> tumbled
on continuing fears that Ireland's bailout might not help keep
Europe's debt problems contained. []
Converting prices to euros, Brent reached its highest level
for almost seven months on Tuesday, climbing above 67 euros per
barrel.
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Graphic of Brent in euros and the dollar index:
http://link.reuters.com/bef77q
Graphic of the components of the CRB commodity index:
http://graphics.thomsonreuters.com/F/08/CRB291110.gif
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Robert Montefusco at Sucden Financial in London said the
weakness of the euro was putting increased pressure on oil.
"That puts pressure on the fundamentals," Montefusco said.
"Fear of contagion with not only Portugal and Spain, but now
with France and Belgium in focus as well."
Oil and dollar-denominated commodities often move inversely
to the dollar. A stronger dollar typically pressures oil prices
as it boosts the value of greenbacks paid to producers while
making it more expensive for consumers with other currencies.
China's key Shanghai stock index <> closed at a
seven-week low, with a shortfall of cash in the domestic money
market creating a liquidity squeeze. []
Analysts said cash drying up was prompting speculative
retail investors, already on edge about whether the central
bank would introduce further tightening measures, to sell
heavily weighted financials and commodity issues.
Factories in Japan and South Korea, Asia's second- and
fourth-largest oil users, cut output in October, in a region
oil producers look to for demand growth. []
U.S. OIL INVENTORIES
The weekly oil inventory report from the American Petroleum
Institutes is due at 4:30 p.m. EST (2130 GMT) on Tuesday,
followed by the U.S. Energy Information Administration's report
on Wednesday.
U.S. crude oil inventories were expected to have fallen
400,000 barrels last week as imports dipped, a Reuters analyst
survey on Monday said, though analysts were divided with an
equal number of them predicting a decline and an increase.
[]
(Additional reporting by Gene Ramos in New York, Christopher
Johnson and Jonathan Gleave in London and Alejandro Barbajosa
in Singapore; Editing by Marguerita Choy)
