Oil prices fall back as shares plunge

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World oil prices fell on Friday at the end of a rollercoaster week as traders eyed mixed economic data, resurgent doubts over the eurozone debt crisis and plunging European stock markets.

New York's main contract, West Texas Intermediate (WTI) for delivery in November, dipped 12 cents to $82.02 a barrel.

Brent North Sea crude for November was down 53 cents to $103.42 in London midday trade.

In a volatile week for the oil market, prices surged by more than four dollars in New York on Tuesday, mirroring huge gains in equities, as investors hoped that European leaders would contain the eurozone debt crisis.

But prices tumbled on Wednesday as those hopes subsided and after data showed a bigger than expected increase in energy stockpiles in the United States, indicating weak demand in the world's biggest economy and oil consumer.

Prices edged higher Thursday on news that German lawmakers had approved an expansion of the eurozone's rescue fund while sentiment was also lifted by hopeful economic data in the United States.

However, those gains were capped by news of plunging German retail sales and a contracting manufacturing sector in China.

"Following the mixed economic data and weaker global equity markets, crude oil prices reversed and traded lower on Friday, in a correction lower," said Sucden brokers analyst Myrto Sokou.

European equities tumbled once more on Friday, the last trading day of the third quarter, as markets doubted whether a boost to the eurozone bailout fund would provide the panacea to the bloc's debt crisis.

The German parliament on Thursday voted overwhelmingly to beef up the size and scope of the 440-billion-euro ($590 billion) European Financial Stability Facility (EFSF), handing it new powers and easing eurozone crisis concerns.

The move by Germany was greeted with relief by traders as well as bourses in the US and Europe, with attention now turning to the key international audit of debt-mired Greece.

Investors are still on edge amid stubborn fears that Greece could still default and send fresh shockwaves through global financial markets.

"Volatility is going to remain on the commodities board as the situation in the eurozone is still uncertain, without a clear solution for the Greek debt issues," Sokou added.

© 2011 AFP

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