* Weak U.S. and euro zone data weigh on oil price
* Market watches violence between Israel and Hamas
* Front month Brent gains on expiry
(Updates with settlement prices)
By Matthew Robinson and Robert Gibbons
NEW YORK, Nov 15 Oil prices fell on Thursday
when an increase in U.S. weekly jobless data and disappointing
earnings results stoked economic concerns, and the market
focused on violence in the Middle East.
While most of the oil complex pushed lower in afternoon
trading, front-month December Brent crude rose, bolstered by
short-covering ahead of the contract's expiry later in the day.
Pressure came after the release of data that showed U.S.
weekly jobless benefits claims rose last week, reflecting the
impact of late October's superstorm Sandy, which also damped
economic activity in the mid-Atlantic states.
Data showing the euro zone slipped into its second recession
since 2009 in the third quarter also weighed down prices.
Disappointing results from Wal-Mart Stores Inc
and the looming U.S. "fiscal cliff" also pressured equity and
Overall trading was choppy, however, with oil prices briefly
pushing higher as violence between Israel and Hamas caught the
attention of markets. Hamas fired dozens of rockets into
southern Israel, killing three people, and Israel launched
numerous air strikes across the Gaza Strip.
While events between Israel and the Palestinian territories
do not directly threaten supplies, oil markets are sensitive to
violence in the Middle East, which pumps a third of the world's
oil. Traders worry that Arab producers could be drawn into the
conflict, which might affect their supply lines.
"Until there is a clear sign that the instability in the
region is spreading toward the oil-producing states, market
participants are likely to approach this situation with caution
and not over react to the upside," said Dominick Chirichella of
New York's Energy Management Institute.
"That said, as long as the tensions and military activity
continue to evolve, oil prices should find some price support in
the short term."
The expiring December Brent contract settled up
$1.37 at $110.98 a barrel, after stalling ahead of the 50-day
moving average of $111.26 a barrel, in light trading. The more
actively traded January Brent, which will becomes the
front-month contract on Friday, dipped 47 cents to settle at
$108.01 a barrel.
December U.S. crude oil futures fell 87 cents to
settle at $85.45 a barrel.
The gains in front-month Brent pushed the contract's premium
to December U.S. oil futures CL-LCO1=R out to $26 a barrel
during intraday trade, the highest since October 2011.
Oil traders have been balancing supply risks from the Middle
East and export problems from the North Sea against ongoing
worries about the impact of the struggling economy on global
"The market was trying to rebound from last week's
four-month lows and, when we failed to attract any buying close
to the $87 mark (for U.S. oil), the markets turned, and some of
the new longs bailed," said Gene McGillian, an analyst at
Tradition Energy in Stamford, Connecticut.
"Economic uncertainty continues to derail any efforts for
the market to push higher."
News that Statoil had shut its Troll C oil and gas platform
in the North Sea due to corrosion in a gas treatment system -
cutting Norway's oil production by around 8 percent - added to
mounting supply problems in the region, which has faced a series
of export delays over the past month.
Closely watched weekly U.S. inventory data from the Energy
Information Administration showed a build in crude oil
stockpiles over the past week.
Gasoline and diesel inventories along the East Coast, which
were struggling last week to recover from massive pipeline,
barge and refinery disruptions caused by Hurricane Sandy, fell
Overall, U.S. distillate stockpiles fell by 2.54 million
barrels, compared with forecasts for a 1.3 million barrel
drawdown. Levels of the fuel in the Midwest decreased by 3.24
million barrels to the lowest level since November 2011.
Low inventories of distillates, which include diesel and
heating oil, have stirred concerns about a shortfall heading
into winter, especially in the giant Northeast market.
"The distillate draw is quite bullish in isolation. We are
not in a good position heading into winter fuel season," said
John Kilduff, a partner at Again Capital LLC in New York.
(Reporting by Matthew Robinson and Robert Gibbons in New York;
Alice Baghdjian in London; Manash Goswami in Singapore; Editing
by Grant McCool,; Peter Galloway and Andre Grenon)