* 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
(Updates with settlement prices and market activity)
By Gene Ramos
NEW YORK, Oct 28 (Reuters) - Oil prices ended higher on
Thursday, supported by positive U.S. jobless claims data and as
the dollar weakened on rising worries about the extent of an
expected U.S. Federal Reserve monetary easing.
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. crude for December delivery <CLc1> settled up 24 cents
at $82.18 a barrel, after dropping earlier to $81.50. It has
gained in four of the last five sessions.
ICE December Brent crude <LCOc1> ended up 43 cents at
$83.59.
Prices ended below session highs, which were reached
earlier as the dollar weakened, and as U.S. first time jobless
benefit filings unexpectedly fell last week to a three-month
low, a slight improvement in the depressed labor market.
[]
U.S. equities eased as investors took to the sidelines,
awaiting the results of the mid-term elections next week and
ahead of the Fed's expected quantitative easing. []
"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 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. []
DOLLAR DOWN, EYES ON QE2
The dollar <.DXY> fell as investors again reassessed how
much money the Fed was likely to commit in a second round of
economic stimulus
.
At 3:27 p.m. EDT (1927 GMT), the greenback was down 1.1
percent against a basket of currencies. 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.
[]
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 indicator 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, due to higher 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 Sofina Mirza-Reid)
