* Downward trend outweighs tensions in Korean peninsula
* Technicals show oil in narrow range []
* Coming Up: API oil inventory data; 2130 GMT
(Adds Korean tension, analyst's quote, updates prices) )
By Florence Tan
SINGAPORE, Nov 23 (Reuters) - Oil fell to near $81 on
Tuesday, as the dollar gained against the euro on fears that
Ireland's debt crisis may spread in the euro zone, resuming
its downward trend after a brief upwards blip on news of
tension running high on the Korean peninsula.
North Korea fired dozens of artillery shells at a South
Korean island, setting buildings on fire and provoking a
return of fire by the South, Seoul's military and media
reports said. []
U.S. crude for January <CLc1> shed 67 cents to $81.07 a
barrel by 0744 GMT, after having dropped 71 cents on Monday.
ICE Brent <LCOc1> was down 66 cents to $83.30 a barrel.
The market tended to heavily discount incidents such as
Tuesday's Korean exchange, one analyst said.
"People would buy the dollar and that would have an effect
on crude's ability to climb higher," said Jonathan Barratt,
managing director of Sydney-based Commodity Broking Services.
News of the exchange of fire sent U.S. 10-year Treasury
futures <TYc1> rising and the Japanese yen falling. The
dollar index , which measures the greenback against a
basket of currencies, gained 0.31 percent.
The euro earlier fell to as low as $1.3548, coming
under renewed pressure as political uncertainty in Ireland and
worries about other heavily-indebted members of the 16-nation
bloc snuffed out initial optimism over a bailout plan for
Dublin.
"Further oil market volatility cannot be excluded as Irish
domestic political developments may yet slow the negotiation
of the aid package with the EU/IMF, and that attention will at
some point shift its focus to other euro zone economies,"
JPMorgan analysts said in a note.
"Looking forward over the course of the week, there
appears to be little macroeconomic news to drive sentiment,
apart from the repercussions of the Irish settlement."
Irish Prime Minister Brian Cowen defied mounting pressure
to quit on Monday, saying he would stay in office until
parliament passed an austerity budget needed to secure the
IMF/EU bailout, which could total 80 billion to 90 billion
euros, and then call an early election. []
DROP IN CRUDE STOCKS
However, hopes of a drawdown in U.S. crude stocks in the
week to Nov 19, reflecting better demand at the world's top
energy consumer, may support prices.
Data from the United States is expected to show a third
week of decline for crude inventories in the week to Nov. 19
following a surprise heavy drawdown in the previous week, a
Reuters poll showed on Monday.
"Seasonally demand (in the U.S.) should be improving in
this quarter of the year. Inventories are coming off,
especially for distillates," said Serene Lim, a
Singapore-based oil analyst at ANZ.
Traders are also watching the impact from a disruption of
Shell's crude production in Nigeria.
Nigerian output of Bonny Light crude has fallen by about
100,000 barrels per day (bpd) to between 210,000 and 220,000
bpd after a damaged pipeline led Shell to declare a force
majeure on exports on Friday. []
The market is also keeping an eye on the political
situation in Saudi Arabia as the country's aging King Abdullah
arrived in the United States for medical treatment on Monday,
while a frail Crown Prince Sultan hurriedly returned from
abroad to govern the world's largest oil exporter.
[]
(Editing by Clarence Fernandez)
