* U.S. initial jobless claims fall, supports oil
* Doubts about Fed's expected QE2 worry oil investors
* Wall Street slips, putting pressure on oil
* Coming Up: U.S. Q3 GDP, consumer mood, on Friday
(Recasts, updates prices and market activity, changes
byline and dateline from previous LONDON)
By Gene Ramos
NEW YORK, Oct 28 (Reuters) - Oil prices seesawed on
Thursday as investors weighed positive jobless claims data
against worries about the extent of an expected U.S. Federal
Reserve monetary easing and weaker equities.
All eyes remain on the U.S. Federal Reserve, which is
expected to announce a second round of easing after its policy
setting committee meets on Nov. 2-3.
U.S. stocks also fell, as 3M <MMM.N> dragged industrial
shares lower and investors shied away from big bets ahead of
the Federal Reserve's expected monetary easing. []
By 12:25 p.m. EDT (1625 GMT) U.S. crude for December
delivery <CLc1> rose 6 cents at $82 a barrel, after dropping
earlier to $81.50. ICE December Brent crude <LCOc1> gained 24
cents at $83.47.
Prices were much higher earlier, supported by a weaker
dollar and upbeat jobless benefits first-time filings, which
fell last week to a three-month low. []
"The weekly claims number provided some support to crude
oil but the ruminations over the election and the coming QE2
regime are acting as head winds," said John Kilduff, partner at
Again Capital LLC in New York.
"The market looks somewhat directionless until the the
election and the Federal reserve details next week are known,"
Kilduff added.
Earlier, the oil market was also supported by Shell
<RDSa.L> and Eni <ENI.MI> beating analyst forecasts with sharp
gains in third-quarter profits, helped by higher oil and gas
prices. []
The dollar <.DXY> extended losses against a basket of
currencies and was down 1.20 percent. A weaker dollar typically
renders dollar-denominated commodities cheaper for non-dollar
buyers, but can also signal a tempered growth outlook at the
world's largest oil consumer. []
The negative correlation between the dollar and crude had
reached its strongest in 14 months earlier this week.
[]
EYES ON QE2
Estimates of the length and amount of the Fed's easing
program varied widely, ranging from $250 billion to as high as
$2 trillion in a Reuters survey of economists. []
"It's unlikely that QE alone is going to provide the
necessary stimulus for a recovery in commodities. I think there
needs to be a very firm underlying picture of economic health
in the U.S before we see any prolonged or sustained rally,"
Paul Harris, a natural resource analyst at Bank of Ireland,
said.
Another indication on the pace of growth is due on Friday,
when the United States is expected to show a 2 percent increase
in third-quarter GDP growth, up from 1.7 percent in the prior
quarter lifted by an acceleration in consumer spending, a
Reuters poll showed. []
U.S. oil demand jumped last week resulting in a big 4.4
million-barrel drop in gasoline inventories, the Energy
Information Administration reported on Wednesday. []
Still, the overall bearish effect of the latest inventory
data remained as crude stockpiles rose more than 5 million
barrels.
Strike action at six French oil refineries ended, but oil
shortages are likely to continue to bite as workers voted to
continue protests at France's two largest oil ports of
Fos-Lavera and Le Havre. []
(Additional reporting by Robert Gibbons in New York; Zaida
Espana and Isabel Coles in London; Alejandro Barbajosa in
Singapore; Editing by Lisa Shumaker)
