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Oil slips below $100 as rising gasoline stocks temper positive glimmers from US economy
Oil slipped below $100 a barrel on Friday due to caution over Greek debt relief talks and as signs of weaker gasoline demand tempered hopes of economic recovery in the U.S.
By early afternoon in Europe, benchmark crude for February delivery was down 58 cents at $99.81 a barrel in electronic trading on the New York Mercantile Exchange. The contract, which expires later Friday, fell 20 cents to finish at $100.39 on Thursday.
In London, March Brent crude was down 18 cents to $111.37 on the ICE Futures exchange.
Markets have largely been supported so far this year by stronger economic indicators from the U.S. ' jobless claims fell, consumer prices were steady and the dismal home construction market showed more signs of life.
While some of the concerns about Europe's debt crisis and future energy demand receded as France and Spain staged successful bond auctions, investors were awaiting the outcome of the talks in which the Greek government is trying to convince investors to write down euro100 billion ($129 billion) of its debts.
Greece needs the deal to avoid a potentially devastating default this spring.
Price gains were also capped by figures in the weekly U.S. oil inventory report. The Energy Department said Thursday that the nation's crude oil supplies declined about 1 percent last week but gasoline stocks rose 1.7 percent while demand over the past four weeks is down 6.1 percent from a year earlier.
"The market focused on the rising gasoline stocks which indicated continuing weak oil demand in the U.S. This has capped oil futures from gaining further despite some positive economic news from the U.S. and Europe," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
Analysts say oil prices will continue to fluctuate until there is more certainty about the direction of the global economy.
"We are not left feeling bullish after the (U.S. stockpile) data and maintain our bearish biases," said a report from U.S. energy analyst and trader Stephen Schork. "But then again, all it takes is one snide remark from Iran to send prices surging higher."
Iran has been threatening to close the Strait of Hormuz, a waterway used to transport around one-sixth of the global oil flow, because of new U.S. sanctions aimed at the Islamic Republic's disputed atomic program.
In other Nymex energy trading in February contracts, heating oil lost 0.07 cent to $3.0353 per gallon and gasoline futures fell 0.32 cent to $2.8126 per gallon. Natural gas added 1.8 cents to $2.34 per 1,000 cubic feet.
Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.