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UPDATE 10-Oil falls as Europe's crisis reinforces growth worries
September 26, 2012 / 5:31 AM / 5 years ago

UPDATE 10-Oil falls as Europe's crisis reinforces growth worries

* Clashes erupt in Greece during anti-austerity strike
    * Spain GDP falling at "significant rate" - central bank
    * U.S. crude, products stocks fell last week - EIA
    * U.S. gasoline futures rally more than 3 percent
    * Coming up: U.S. jobless claims 8:30 a.m. EDT Thursday

 (Adds detail paragraphs 3,8,10-11)
    By Robert Gibbons
    NEW YORK, Sept 26 (Reuters) - Crude oil prices fell on
Wednesday as the euro zone debt crisis escalated which
reinforced concerns about slowing economic growth, while U.S.
gasoline futures jumped more than 3 percent due to depressed
inventories and supply uncertainty.
    The dispute between the West and Iran over Tehran's nuclear
program limited losses for Brent crude, which is more sensitive
to supply disruptions in the Middle East and Africa.
    Europe's debt problems deepened as Spain's economy continues
to slow and anti-austerity demonstrators and police clashed in
Athens and Madrid, pushing the euro to a two-week low against
the dollar and pummelling European equities.  
    The dollar index strengthened, pressuring
dollar-denominated industrial commodities like oil and copper.
 
    "It is 'risk off' today," said Olivier Jakob, energy analyst
at Petromatrix in Zug, Switzerland. "The Greek strike and
Spanish demonstrations are getting a lot of coverage."
    Developments in Europe overshadowed any bullish sentiment
generated by government data showing U.S. crude inventories fell
2.45 million barrels last week, against analyst expectations
that they would be higher.    
    Brent November crude fell 41 cents to settle at
$110.04 a barrel, after stumbling to $108.45. 
    Brent hit a six-week low of $107.10 last Thursday, but
remained on track this week to post a 12 percent gain for the
third quarter, after sinking 20 percent in the previous quarter.
    U.S. November crude tumbled $1.39 to settle at $89.98
a barrel, below its 100-day moving average of $90.27 and the
lowest settlement and first under $90 since Aug. 2. Wednesday's
session low of $88.95 was its lowest since prices hit $87.23
intraday on Aug. 3.
    U.S. crude was on pace to post a nearly 6 percent gain for
the third quarter, after a 17.5-percent second quarter dive. 
    Brent's premium to U.S. crude CL-LCO1=R increased to
$20.06 a barrel based on settlements, moving above the $20 level
for the first time since Aug. 16. 
    
    U.S. GASOLINE RALLY
    U.S. RBOB gasoline futures jumped 11.40 cents, or 3.8
percent. Gasoline pushed back above $3 a gallon, even as the
rest of the oil complex was pressured.
    Gasoline got a lift from a report of an explosion at Irving
Oil Ltd's New Brunswick, Canada, refinery, though the company
later said the blast was in a tank and that normal operations
had resumed at the refinery. 
    Seasonal maintenance at refineries on both sides of the
Atlantic ahead of Northern Hemisphere winter fuel demand added
support to futures prices.  
    U.S. gasoline inventories fell 481,000 barrels against
expectations they would be up slightly, putting total U.S.
stocks and East Coast inventories at their lowest since October
2008, according to data from the U.S. Energy Information
Administration.
    "We've seen major moves on the RB (gasoline) market so far
and the continuing draws on inventory are giving us not much
hope with maintenance season ahead," said Carl Larry, president
at Oil Outlooks LLC.
    The East Coast region includes the New York Harbor, delivery
point for the U.S. gasoline futures contract traded on the New
York Mercantile Exchange.
    U.S. heating oil, the benchmark distillate futures
contract, edged 0.06 percent lower, as front-month October
refined products contracts headed for expiration on Friday.
    
    EUROPE'S CRISIS
    Demonstrators clashed with police on the streets of Athens
and Madrid on Wednesday anger at new austerity measures being
imposed on two of the euro zone's most vulnerable economies
spilled into the streets. 
    The Bank of Spain said the country's gross domestic product
fell at a "significant rate" in the third quarter, helping
pressure European equities to their worst session in two months.
  
    
    IRAN'S NUCLEAR PROGRAM
    According to some experts and diplomats, Iran appears to be
making headway in building a research reactor that could yield
potential nuclear weapon material. 
    Iranian President Mahmoud Ahmadinejad on Wednesday told
reporters at the United Nations that Tehran is capable of
neutralizing all efforts to sabotage its nuclear facilities and
repeated that Iran is ready for dialogue with the United States.
    
    
    

 (Additional reporting by Janet McGurty in New York, Christopher
Johnson in London and Ramya Venugopal in Singapore; Editing by
David Gregorio and Jim Marshall)

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