Oil Slides to Six-Week Low; Off 7% For Week

Oil fell to six-week lows Friday as fresh concerns about the euro zone added to the economic gloom that knocked nearly 7 percent off prices this week.

Greece played down reports that it was considering a solution to its debt crisis involving bigger losses for its banking creditors as a fresh round of strikes gripped the country in protest over new austerity measures.

Oil markets have been gripped by external economic factors this week, tumbling more than 4 percent on Thursday after weak Chinese industrial data and a bleak economic outlook from the U.S. Federal Reserve sent traders into safer havens, triggering the biggest commodity sell-off since May.

Commodities were hit again on Friday, with gold down 6 percent in the third-worst daily sell off in 20-years.

``Worries remain regarding the risk of Greek debt default and while the G-20 moral support to Europe to boost its financial stability funding is better than nothing,'' said Tim Evans, energy analyst at Citi Futures Perspective in New York.

``The markets are interested in seeing action and not just words.''

In London, Brent crude for November delivery was down $1.25 to $104.24 a barrel by 1 p.m. EDT (1700 GMT), after dropping to $103.43, the lowest since Aug. 10.

U.S. November crude was off 85 cents at $79.66, after hitting a session low of $77.55, the lowest intraday for a front-month contract since Aug. 9.

Brent crude traded actively and its volume was up 1.4 percent above the 30-day average and U.S. crude was about 13 percent below the 30-day average, according to Reuters data.


Hopes for action to preserve financial stability and beef up liquidity in money markets are focused on the annual meeting of the World Bank and the International Monetary Fund in Washington this weekend.

Oil prices have also been affected by the prospect of a faster-than-expected restart of Libyan production that could add to supply of high-quality oil, especially to Europe where supply had been tightened by the war in Libya and outages in the North Sea and Nigeria.

Despite the slump, JP Morgan maintained its forecast of $115 a barrel for Brent for 2012, citing the prospect of supply curbs by OPEC producers to prop up prices.

``As long as producers are prepared to trim output back to mid-2010 levels, we believe that Brent is likely to remain in a $100 to $120 per barrel range, and it would likely require a recession as deep as 2009 or those seen in the early 1980s to trigger a material downgrade,'' the bank said in a report.

``A recession of that magnitude would necessitate a significant price adjustment,'' it added. (Additional reporting by Robert Gibbons in New York, Alex Lawler in London, Manash Goswami in Singapore; Editing by Marguerita Choy)