Brent, US crude up

Brent oil futures and US crude ended higher on Friday after two days of losses, helped by upbeat US economic data and a Reuters report that a planned investment vehicle from China would manage funds in the United States and Europe. In London, ICE Brent January crude settled at $108.62 a barrel, up 51 cents, or 0.5 percent.
For the week, front-month Brent fell $1.32, or 1.2 percent, after ending at $109.94, up $3.54 or 3.3 percent, in the week to December 2. US crude futures settled more than a dollar higher on Friday. NYMEX January crude settled at $99.41 a barrel, gaining $1.07, or 1.09 percent, also supported by short-covering after two days of losses. For the week, front-month crude fell $1.55, or 1.54 percent, after ending up at $100.96, up $4.19, or 4.3 percent in the week to December 2.
Both Brent and US crude futures were on pace to post weekly losses as caution remained about Europe's ability to tackle its debt problems. Neither got much support from report showing US consumer sentiment rose to its highest level in six months in early December. All 17 members of the eurozone and six other countries that aspire to join the bloc agreed to negotiate a new deal alongside the EU treaty with a tougher deficit and debt regime to insulate the eurozone against the debt crisis.
Oil prices wobbled with rises and falls in the euro. "The euro is yo-yoing and oil prices are moving with it," said Stephen Schork, editor of the Schork Report, in Villanova, Pennsylvania. "The euro is now positive again after having turned negative briefly." Cartsen Fritsch, analyst at Commerzbank, said some investors were disappointed at the outcome of the European Union summit: "The market had expected a bit more from the summit."
John Kilduff, partner at hedge fund Again Capital LLC in New York, agreed that the outcome of the eurozone summit seemed anti-climatic: "Will this be enough to avoid (a) downgrade? Probably not," Kilduff said. Investors seemed to find some comfort from an exclusive Reuters report out of Beijing that China's central bank would create an new investment vehicle worth $300 billion, partly focused on Europe, raising hopes that Chinese funds could be used to support European growth and bolster demand.
Thorbjoern Bak Jensen, analyst at Global Risk Management, said news of the Chinese investment fund had helped reverse negative sentiment after the division at the EU summit. "It gives some support to risk sentiment," Jensen said. A separate report showed China's annual inflation rate fell in November to 4.2 percent, lowest in more than a year, fuelling expectations for more monetary policy easing to stem slowing economic activity.
The inflation rate is now close to the government's official target of 4 percent and has dropped rapidly since hitting a three-year high of 6.5 percent in July. Chinese industrial output rose 12.4 percent from a year earlier, though slowing from October's 13.2 percent. Continuing tensions between the West and Iran remained a background support for oil prices, along with political risk remaining in Syria, Egypt and in parts of the Gulf.