* Dollar, treasuries up on Korean incident, pressure oil
* Irish debt, contagion fear pressure euro, weigh on oil
* Coming up: EIA oil inventory data, 10:30 a.m. EST Wed
(Updates with API oil inventory data paragraphs 15-17 and 19)
By Robert Gibbons
NEW YORK, Nov 23 (Reuters) - Oil prices slipped on Tuesday
in choppy trading as fears of an escalating euro zone crisis
and a North Korean attack on a South Korean island triggered a
rally in the dollar, though buyers returned when oil fell to a
session low near $80, which limited losses.
The dollar index <.DXY> posted its strongest rise in over a
month as uncertainty over Ireland's willingness to adopt an
austerity budget threatened to deepen the political crisis and
after North Korea fired artillery at South Korea in one of the
heaviest attacks since the 1953 cease fire. []
"Markets are under pressure on North and South Korea
fighting, as there seems to be a flight to dollars. Concerns
about Ireland debt didn't go away. So far crude has held the
$80 area," said Tom Bentz, broker at BNP Paribas Commodity
Futures Inc in New York.
Oil bounced off lows and briefly turned positive as many
traders were cautious about being short ahead of the U.S.
Thanksgiving holiday on Thursday.
U.S. crude oil for January delivery <CLc1> fell 49 cents to
settle at $81.25 a barrel. Oil bounced from an early intraday
low of $80.28 and total U.S. trading volume rose from Monday,
but remained 21 percent below the 30-day average.
In London, ICE January Brent crude <LCOc1> fell 71 cents to
settle at $83.25 a barrel.
"We are concluding that a portion of today's strong
recovery was prompted by a renewed entry of speculative capital
back into the long side following the liquidation phase of the
past couple of weeks," Jim Ritterbusch, president at
Ritterbusch & Associates, wrote in a note.
After weeks of whipsaw trading amid expectations over the
Federal Reserve's quantitative easing policy, then fears of
Chinese monetary tightening and concerns about Europe, oil
prices have traded in a narrow band the past five days, with
volumes slumping as the year-end approaches.
The European Union urged Ireland to adopt an austerity
budget in order to receive an EU/IMF bailout. []
German Chancellor Angela Merkel said Ireland's crisis was
different to Greece's but just as worrying and the euro was in
an "exceptionally serious" situation. []
The euro plunged to a seven-week low against the dollar and
fell 2 percent versus the yen on growing worries the euro
zone's debt crisis could spread beyond Ireland. []
The EU situation and the Korean incident overshadowed
reports showing the U.S. economy grew faster than previously
estimated in the third quarter, though existing home sales fell
more than expected in October. []
Prices showed little reaction to the release of minutes
from the Fed's November policy meeting, which showed officials
considered a number of options before settling on buying $600
billion in Treasuries.
World equities also fell while 10-year Treasury futures
<TYc1> rose as the tensions between the two Koreas added to
global economic worry. [] []
OIL INVENTORIES
After oil prices received some support from the
expectations that weekly oil inventory reports would show lower
crude stocks, U.S. crude stocks were reported to have
unexpectedly increased 5.2 million barrels on rising imports in
the week to Nov. 19, industry group the American Petroleum
Institute reported late on Tuesday. []
The API said gasoline stocks fell 499,000 barrels and
distillate stocks fell 311,000 barrels, the API said.
Crude prices extended losses slightly after the release.
U.S. crude oil stockpiles were expected to have fallen 2.1
million barrels in the week to Nov. 19, according to a Reuters
analyst survey. []
The U.S. Energy Information Administration's stocks data is
set for release on Wednesday at 10:30 a.m. EST (1530 GMT).
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Map showing the location of the artillery exchange on the
Korean peninsula: http://link.reuters.com/wyh76q
Graphic of the components of Reuters-Jefferies CRB Index of
commodities: http://link.reuters.com/kew48n
Links to stories on Europe's debt crisis: []
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
The gasoline crack spread narrowed for a second day on
Tuesday, falling to $5.96 intraday and U.S. gasoline futures
<RBc1> also remained under pressure.
"All the refinery restarts in New York Harbor area still
putting pressure on products, mostly RBOB (gasoline)," said
Bentz.
(Additional reporting by Gene Ramos in New York, Christopher
Johnson in London and Florence Tan in Singapore; Editing by
David Gregorio)
