(Refiles, replaces missing words in first paragraph)
* Bernanke signals more easing to avoid deflation
* Dollar flips higher versus euro, currency basket
* US inflation slows, consumer sentiment dips
* OPEC says $75-$85 oil won't hurt global economy
(Recasts, updates prices and market activity, changes by-line
and dateline, previously LONDON)
By Gene Ramos
NEW YORK, Oct 15 (Reuters) - Oil fell sharply in thin,
volatile trading on Friday, on course for its first weekly loss
in four weeks as options were set to expire and the dollar
shifted higher, prompting profit-taking in oil futures ahead of
the weekend.
Oil prices rose early in the session, after U.S. Federal
Reserve Chairman Ben Bernanke signaled that the central bank
would likely pump more money into the sagging economy.
At a speech in Boston, Bernanke said high unemployment and
low inflation point to a need for a further easing of U.S.
monetary policy, but offered no details on the central bank's
next step. []
That prompted investors to raise questions about the size
and the timing of the widely expected purchases of government
debt by the central bank in a second round of quantitative
easing measures. The unease prompted profit-taking.
The expiry of options on Friday also pressured U.S. crude
futures. Crude oil for November delivery <CLc1> fell $1.40, or
1.7 percent, to $81.29 a barrel by 1:00 p.m. EDT (1700 GMT). It
hit a session low of $81.22.
ICE December Brent crude <LCOc1> dropped $1.64, or 1.9
percent to $82.56, after sliding to a low of $82.46.
The dollar weakened after Bernanke's statement but rallied
later on the view that quantitative easing was already priced
in. A stronger dollar makes commodities like oil more expensive
for buyers holding other currencies.
"The oil slide started as the dollar continued to rise. But
as November crude penetrates various strike prices, it causes
traders to sell futures to protect against expiring option
exposure," said Tom Bentz, broker at BNP Paribas Commodities
Futures Inc in New York.
Economic reports kept pressure on the Federal Reserve to
act soon to lessen the risk of a downward price spiral.
U.S. inflation unexpectedly slowed in September despite a
pick-up in retail sales, the government said. A survey showed
U.S. consumer sentiment unexpectedly dipped in early October to
its weakest level since July, with buying plans declining,
On a brighter note, a gauge of manufacturing in New York
State jumped in October, lifted by improvements in new orders.
"The market is still very jittery and everyone is trying to
second guess the Fed," said Olivier Jakob, oil analyst at
Petromatrix..."There is nothing really new in what he
(Bernanke) said and the market was fully anticipating more
quantitative easing already."
OPEC's secretary general said oil prices of $75-$85 a
barrel would not hold back the global economy. Some members
have called for higher prices to compensate for a weak U.S.
dollar.
OPEC decided on Thursday to leave its oil output policy
unchanged, as it has done since agreeing to a record output cut
in December 2008.
(Additional reporting by Robert Gibbons in New York and Joe
Brock in New York; Editing by David Gregorio)
