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Oil steadies following sharp falls

Thursday, October 04 07:36:44

Oil prices fell sharply on Wednesday as disappointing economic data from China and Europe reinforced concerns about slowing growth and a weakening demand for petroleum, even as supportive U.S. data strengthened the dollar. U.S. November RBOB gasoline futures retreated a second straight session, falling 2.5 percent, helping pressure U.S. crude to a two-month low. Concerns about China and Europe allowed investors to shrug off any supportive sentiment that might have accrued from the U.S. Energy Information Administration's (EIA) inventory report. The EIA said U.S. crude stocks fell 482,000 barrels last week, against forecasts stockpiles would be up 1.5 million.

"The global economy is in a rut, and even with supportive EIA data crude is down," said Dan Flynn, an analyst at Price Futures Group in Chicago. Brent November crude fell $3.40 to settle at $108.17 a barrel. Wednesday's $107.67 low was the lowest price since Sept. 20. Brent's drop on Wednesday put it in sight of the 100-day moving average of $106.28, after Tuesday's settlement below two technical levels also closely watched by traders charting price movements - the 50-day moving average at $112.06 and the 200-day moving average at $112.09. U.S. November crude slumped $3.75 to settle at $88.14 a barrel, below its 100-day moving average of $89.99. It dropped to $87.70 in post-settlement trading, its lowest since prices fell to $87.23 on Aug. 3.

The 4.08 percent slide was the biggest one-day percentage drop since June 21. Total crude trading volumes were healthy, with Brent turnover 17 percent above its 30-day average and U.S. dealings surpassing its 30-day average by 22 percent. In addition to the slump in U.S. gasoline, which settled 6.97 cents lower, heating oil joined in the retreat, falling 5.91 cents. Gasoline's settlement left front-month futures down 54.25 cents from where October futures settled and went off the board last Friday. U.S. gasoline stocks rose slightly, by 114,000 barrels, last week, the EIA's report said, while distillate inventories fell. ( C) Reuters