* Investors cautious after high yields at Spain bond auction
* Weak U.S. economic data stokes demand worries
* Global growth seen subdued, Reuters poll shows
By Jessica Jaganathan
SINGAPORE, April 20 Brent crude held above $118
a barrel on Friday, but prices were headed for their steepest
weekly drop in more than three months as Spain's high borrowing
cost kept intact fears that the euro zone debt crisis could
flare up again.
Disappointing U.S. jobs data, which added to recent evidence
the global economy is on shaky ground, dented the outlook for
oil demand, capping gains in oil prices.
Investors are now awaiting next week's meeting of U.S.
Federal Reserve policymakers that will be closely scrutinised
for any hints of a third round of monetary easing by the world's
top oil consumer, which could boost appetite for riskier assets
Brent crude gained 27 cents to $118.27 a barrel by
0653 GMT, but was on track for its steepest weekly loss since
mid-January. U.S. crude gained 48 cents to $102.75,
mostly unchanged from a week ago.
"The Spain sovereign debt auction went rather well, but the
European economy is still very unstable which is affecting Brent
prices," said Yusuke Seta, a Tokyo-based broker at Newedge.
Spain sold 2.5 billion euros in 2- and 10-year bonds, at the
top end of the targeted amount, but yields on the key 10-year
bond were higher, reflecting fears it may miss its budget
Economists polled by Reuters said Spain and Italy would not
need international bailouts as they battle through their debt
crises, although their economic ills may drag the euro zone's
recession into mid-year.
The global economy is set to expand by a modest 3.3 percent
this year, slower than the International Monetary Fund's 3.5
percent growth estimate, Reuters polls of more than 700
But in a sign that the Group of 20 developed and emerging
economies has made progress in building up a global firewall to
contain the euro zone crisis, Japan's finance minister said the
IMF is likely to achieve the touted $400 billion boost to its
financial firepower as more countries signalled readiness to
"Oil traders continue to play the 'growth evaluation game'
in trying to ascertain if the price of crude will have an
extension of its stay above the psychological $100 mark over
coming months," Tim Waterer, senior trader at CMC Markets wrote
in a note on Friday.
"Supply concerns have given way to question marks over
future demand which has created the downward price pressure on
oil in recent weeks."
U.S. CRUDE SUPPORTED
Brent may drop to $116.70 per barrel according to a
Fibonacci projection analysis, Reuters market analyst Wang Tao
said. U.S. oil needs to drop below a support at $101.67 to
confirm a target at $100.68, he added.
Concerns about possible supply shortages as Western
sanctions target exports from Iran drove Brent to above $128 a
barrel in March, the highest since 2008.
But allaying these concerns was Saudi Arabia's move to offer
extra crude supplies to some of its existing customers probably
because it has more available while its own refineries are
U.S. crude remained supported on expectations that an oil
glut in the U.S. Midwest would ease with an
earlier-than-scheduled plan to reverse the flow of the Seaway
"Expectations that the stockpile in Cushing will be moved to
the U.S. Gulf Coast is prevailing on the U.S. crude prices over
a bearish Brent market," Seta said.
U.S. crude stocks had jumped 3.9 million barrels in the week
to April 13, exceeding analyst expectations.