Oil remains down

Crude oil futures fell for a second straight day on Thursday as disappointing comments from the head of the European Central Bank increased doubts among investors that the region's debt crisis will be contained. The ECB cut interest rates as expected, but following the move, ECB President Mario Draghi said the bank did not consider cutting rates further and he remained cautious about further bond purchases, dashing hopes for more ECB help to quell the two-year-old debt crisis.
US jobless claims fell last week to a ninth-month low, data showed, but that failed to ease investor anxiety ahead of a much-anticipated summit of European Union leaders on Friday. The summit will attempt to produce a credible solution to the region's raging debt crisis.
"Although the ECB gave investors the rate cut and easier loan terms they were looking for, the markets remain nervous ahead of Friday's EU summit and not all the bulls are sticking around to see the outcome," said Tim Evans, energy analyst at Citi Futures Perspective in New York.
By 2:45 pm EST (1945 GMT), ICE Brent crude traded in London at $107.92 a barrel, down $1.61, having dropped to a session low of $107.53, the lowest since November 28. US January crude settled at $98.34, falling $2.15, or 2.14 percent, the biggest one-day loss since November 17.
Brent's premium against US crude widened a bit to around $9.60, after closing at $9.04 on Wednesday.. Brent trading volume was down more than 8 percent from its 30-day average. US crude dealings were down more than 7 percent from its 30-day average. The European Central Bank cut interest rates by 25 basis points to 1.0 percent, as expected, and US claims for unemployment benefits dropped to a nine-month low last week, adding to recent data that reinforces a growing recovery in the labour market.
Following Draghi's comments, the euro tumbled against the dollar, a situation that discourages investors from buying risky assets such as oil and equities. "If the euro keeps losing ground against the dollar, then we are going to have oil move lower too," said Harry Tchilinguirian, analyst at BNP Paribas. As investors awaited for signs of an agreement at the summit on a comprehensive plan to contain the region's debt crisis, European Commission President Jose Manuel Barroso appealed to European leaders to put aside differences to support their common currency.
"We are still viewing this as a 'buy the rumour and sell the news' scenario that could play out during the next few sessions by a downside move across the various fixed assets as actual implementation of any EU strategies could prove elusive," they said. The day's slide added to Wednesday's losses that in part were brought about by an unexpected increase in weekly US crude inventories and a larger-than-expected rise in petroleum products.
Top oil exporter Saudi Arabia has said it was pumping at more than 10 million barrels per day, its highest rate in decades, signalling it would meet customer demand with more oil if needed. It was another factor in Wednesday's losses. Disclosure of the latest Saudi oil output rate came ahead of the December 14 meeting of the Organisation of the Petroleum Exporting Countries, which is not expected to make big changes in output policy, with oil well above $100 a barrel.
The prospect that the EU may ban imports of crude from Iran - Opec's second-largest producer - due to Tehran's nuclear work remains supportive for oil prices. But diplomats and traders say that, if implemented, an embargo could damage the region's economy without doing much to undercut Iran's oil revenues. On Thursday, US President Barack Obama said the United States was considering all options on Iran and would work with allies, including Israel, to prevent Tehran from acquiring a nuclear weapon.