Crude oil posts second straight weekly loss

Oil edged lower in volatile trading on Friday, posting a second consecutive weekly loss as caution about Europe's debt crisis and year-end positioning continued to spark selling into rallies. Weak trading volume as the holiday season approaches contributed to the choppy trading and both Brent and US crude turned slightly higher in post-settlement trading. "After the recent sell-off on the disappointing European Union summit, people are going to be reluctant to go back in long at least until after the holidays," said Phil Flynn, analyst at PFGBest Research in Chicago. Flynn and other brokers also cited caution because of expected ratings agency downgrades of European countries as helping pull oil lower and breaches of key technical levels also triggered intraday selling.- Article continues below US consumer prices were flat in November as Americans paid less for cars and gasoline. The belief that a further sign of a cooldown in inflation could give the Federal Reserve more room to stimulate the economy was seen as supportive for oil. The Brent February crude contract, now the front month, fell 25 cents to settle at $103.35 a barrel, having swung from $102.46 to $104.56. For the week, front-month Brent fell 4.85 per cent, its biggest percentage drop since the week to November 18. US front-month January crude fell 34 cents to settle at $93.53 a barrel, down a third straight day and pushing the intraday below the 300-day moving average of $93.20 and to a low of $92.52. For the week, US crude fell 5.9 per cent, its biggest percentage weekly loss since the week to September 23. Brent's premium against US crude narrowed to under $10 a barrel on Friday, after widening to near $12 a barrel intraday on Thursday. Crude trading volumes remained anaemic, with Brent 42 per cent and US volumes 25 per cent under 30-day averages, respectively. "Volumes are likely to be decreasing slowly as we get nearer to Christmas," said Commerzbank's Weinberg. "During this period, because of the lower volumes, the market is more susceptible to moves that aren't fundamentally sound. We may see some further volatility." Helen Henton, head of commodities research at Standard Chartered, remained bearish on oil going into the first quarter of 2012, citing a slowdown in the global economy. "Brent has stayed quite surprisingly high over the last month, given that we have had dollar strength," she said. "The downside risks for Europe are quite significant, but it will take some trigger to move lower." Currency boost Both Brent and US crude futures received a boost early from a weaker dollar and a higher open by US equities. But the euro turned negative against most currencies, pared its gain versus the dollar and stocks on Wall Street wobbled. Oil prices gyrated last week. Brent shot up to $111.10 on Tuesday on fears about restrictions or disruptions to the key Strait of Hormuz shipping lane and then plunged more than 4 per cent on Wednesday in a broad commodities sell-off triggered by concerns over Europe and the decision of the Organisation of Petroleum Exporting Countries to target production of 30 million barrels of oil per day.