Brent crude slipped towards $110 a barrel this morning as weak data from Europe raised concerns about global demand and a ceasefire in the Gaza Strip eased supply concerns, offsetting positive manufacturing data from China.
The outlook for Europe was bleak with business surveys yesterday showing the euro zone economy was on course for the worst quarter since early 2009, potentially reducing oil demand.
Brent crude slipped 25 cents to $110.30 a barrel by 06.41 GMT, on track for its second weekly gain in three. US crude fell 19 cents against Wednesday's settlement to $87.19 and was on track for its third consecutive weekly gain.
The US market, which was closed yesterday for the Thanksgiving holiday, will not issue a formal settlement until today.
"I think what we're seeing in oil markets at the moment is a repricing after the ceasefire in the Gaza Strip," said Ben Le Brun, a market analyst at OptionsXpress.
"Traders are obviously having one eye on the US fiscal cliff and on Europe with the Greek and Spanish bailouts having a few question marks ... but I'm still a bit surprised we haven't seen as much support in the oil markets as we would have historically expected."
Worries about oil supply eased after Israel yesterday began withdrawing the army that had been poised to invade the Gaza Strip to go after Hamas, with both sides declaring they had won their eight-day battle.
"Concerns over potential supply disruptions have eased after a ceasefire took effect in Gaza - but markets will certainly keep an eye on headlines from the region with some market participants describing the truce as 'shaky'," analysts from ANZ bank wrote in a note this morning.
Reuters
