Brent oil slips on EU turmoil, weak economic data

By Robert Gibbons

NEW YORK (Reuters) - Brent crude prices edged lower on Thursday in volatile trade as a possible referendum in Greece on its debt bailout revived concerns about the euro zone and weak global economic data pointed to further slowing.

Brent and U.S. crude fell a third straight session, but both pared losses after a media report said there was growing opposition from Greek lawmakers to Prime Minister George Papandreou's call for a referendum.

In post-settlement trading, both oil contracts weakened again after a Greece said it expects to win a confidence vote on Friday and will hold a referendum.

Papandreou's unexpected move had sent the euro, equities and oil prices sharply lower along with economic data from China, Britain and the United States that reinforced concerns about slowing economies curbing oil demand.

Investors also monitored reverberations from Monday's bankruptcy filing by brokerage MF Global Holdings Ltd.

"There was a pressure factor earlier this morning from MF Global with the inability to do trades with the local population," said Bill O'Neill, partner at NJ LOGIC Investment.

"Of course we had weak fundamentals with the Greek situation. We came back from the lows to end the day nicely though," O'Neill added.

ICE Brent December crude fell only 2 cents to settle at $109.54 a barrel, having slumped as low as $106.10.

U.S. December crude fell $1 to settle at $92.19 a barrel, ending back above its 100-day moving average of $89.53 after tumbling to $89.17.

Brent's premium to its U.S. counterpart increased, moving back above $17 a barrel.

Crude trading volume improved from Monday's anaemic totals, with U.S. volume only 12 percent below its 30-day average and Brent at its 30-day average.

U.S. stocks also fell after a volatile session, buffeted by the news from Greece. European shares gave back a slice of October's gains and posted the biggest one-day loss in more than a month due to the anxiety over the debt crisis.

"Risk aversion is back," said Eugen Weinberg, head of commodities research at Commerzbank. "The solution to the euro zone debt crisis that we thought we were celebrating last week no longer seems certain."

Copper fell more than 3 percent on the Greece referendum fallout and on an unexpected slowdown in factory activity in top metals consumer China.

MANUFACTURING DATA

Global growth expectations weakened on reports from several key economies showing manufacturing slowing. China's official purchasing managers' index (PMI) fell in October to its lowest level since February 2009. The pace of growth in the U.S. manufacturing sector slowed in October, according to the Institute for Supply Management, against expectations, though improvement in new orders sounded a supportive note in a chorus of gloom.

The UK PMI survey showed the manufacturing sector fell in October at its sharpest rate since June 2009.

U.S. OIL INVENTORIES

Crude prices pared post-settlement losses slightly after industry group American Petroleum Institute's weekly inventory report showed U.S. crude stocks fell 156,000 barrels last week, against a forecast for a stocks rise.

Gasoline stocks fell 1.1 million barrels and distillate stocks dropped 3.4 million barrels.

U.S. crude inventories were expected to have risen by 1.1 million barrels, a Reuters survey of analysts showed.

Distillate stocks were seen down 1.5 million barrels and gasoline stocks down 600,000 barrels, the forecast showed.

Ahead of the API report, MasterCard said U.S. retail gasoline demand fell last week.

The U.S. Energy Information Administration's oil inventory report is due at 10:30 a.m. EDT (1430 GMT) on Wednesday.

(Additional reporting by Gene Ramos and Janet McGurty in New York, Christopher Johnson and Zaida Espana in London and Rebekah Kebede in Singapore; Editing by David Gregorio and Andrea Evans)