Oil slips before weekly US energy report

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Oil prices weakened on Wednesday, before the weekly US energy inventories report, as the market was hit by concerns over European debt and speculation over Chinese monetary tightening.

New York's main contract, light sweet crude for delivery in December, shed 86 cents to 81.48 dollars per barrel.

Brent North Sea crude for January fell 82 cents to 83.91 dollars a barrel in London trade.

Later on Wednesday, the US government's Department of Energy will publish a weekly report on oil inventories for the week ending November 12.

Meanwhile, Commonwealth Bank of Australia analysts said that there were "growing fears that the European debt crisis and tightening policy measures in China will reduce oil demand".

Speculation is building over a possible rescue for Ireland after Greece was bailed out by the European Union and the International Monetary Fund with 110 billion euros in May.

"Several factors are keeping a lid on oil prices at the moment," said Westhouse Securities analyst David Hart.

"Among these, rising inflation expectations in Asia are increasing concerns that growth in the region will be reined back, which would in turn moderate increases in crude demand."

Data released last week showed that Chinese consumer prices rose at their fastest pace in more than two years in October, reviving worries that the authorities might hike interest rates again.

© 2010 AFP

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