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Europe, US worries weigh on oil prices

NEW YORK (AFP) – Oil prices slid Thursday as the euro sank against the dollar on renewed European debt jitters and US crude stockpiles unexpectedly rose, raising concerns about demand.

Traders also booked profits a day after prices spiked close to eight-month highs on heightened tensions between the West and major crude producer Iran, analysts said.

New York’s main contract, West Texas Intermediate (WTI) for delivery in February, closed at $101.81 a barrel, slumping $1.41 from its Wednesday closing level.

In London, Brent North Sea oil for delivery in February dropped 96 cents to settle at $112.74 a barrel.

The US Department of Energy said Thursday that US crude oil reserves jumped 2.2 million barrels in the week ending December 30.

That confounded market expectations for a drop of 900,000 barrels, according to analysts polled by Dow Jones Newswires, and indicated weaker energy demand in the world’s biggest oil-consuming nation.

“It is not very strange that the market took the data negatively immediately after the release.” said DNB Markets analyst Torbjorn Kjus.

Prices also were pressured by fears over the worsening eurozone sovereign debt crisis.

“The dollar has continued to strengthen, weighing on crude oil prices,” noted analyst Jack Pollard at the Sucden oil brokerage.

The European single currency slumped to $1.2777, its lowest level since September 13, 2010.

A stronger greenback makes dollar-priced oil more expensive for buyers using weaker currencies, helping to dampen demand.

Oil prices had surged Wednesday as the European Union moved closer to an Iran oil embargo and Tehran warned the United States to remove its naval forces from the Gulf.

Iran has threatened to disrupt shipping through the crucial Strait of Hormuz, where about 20 percent of the world’s sea-transported oil passes.

The United States and allied nations accuse Iran of developing an atomic bomb; Tehran insists the program is exclusively for peaceful, civilian use.

In oil-rich Nigeria, violent protests continued Thursday against soaring fuel prices after the end Sunday of government fuel subsidies.

Shell, meanwhile, warned of possible production shortfalls after a pipeline was sabotaged in southern Nigeria. Repairs were expected to be completed by the end of the month, the Anglo-Dutch firm said.


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