* Dollar, treasuries jump on Korean artillery exchange
* Irish debt crisis puts euro under heavy pressure <EUR=>
* European, Asian stocks fall, U.S. futures down
* Coming Up: API oil inventory data; 2130 GMT
(Adds detail, comment, updates prices)
By Christopher Johnson
LONDON, Nov 23 (Reuters) - Oil fell towards $81 on Tuesday
as the dollar gained after an exchange of artillery fire on the
Korean peninsula and as the euro fell on fears Ireland's debt
crisis might lead to problems elsewhere in Europe.
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.
[]
European stock markets, which financial bookmakers had been
calling flat before the Korean news, opened lower and remained
down, while U.S. 10-year Treasury futures <TYc1> rose and the
Japanese yen <JPY=> fell.
U.S. crude for January <CLc1> shed 26 cents to $81.48 a
barrel by 1017 GMT, after having dropped 71 cents on Monday. ICE
Brent <LCOc1> was down 20 cents to $83.76 a barrel.
Oil and commodities often move inversely to the dollar,
partly because many of them are priced in the U.S. currency.
The euro came under further pressure as political
uncertainty in Ireland and worries about other heavily indebted
members of the 16-nation bloc snuffed out optimism over a
bailout plan for Dublin. [] []
Analysts said the Korean shelling and Irish meltdown had
come at a time when risk aversion could be expected to rise
anyway ahead of the Thanksgiving weekend in the United States.
"REDUCTION OF RISK"
"We are in front of a very long weekend," Olivier Jakob at
Petromatrix said. "Long weekends usually lead to short-covering,
but the recent political uncertainties in Ireland and the
military escalation between North and South Korea would plead
for reduction of risk in front of the holidays."
"Given that the main area of growth is out of emerging Asia,
the escalation of tensions between North and South Korea is not
a positive development for oil markets," Jakob added.
Mark Pervan, an analyst at ANZ in Melbourne, said the Korean
artillery exchange was "a trigger for the 'risk off' button":
"You'll certainly see selling in risk-based markets like
equities and commodities until we get a better read on events."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a map showing where the artillery exchange on the Korean
peninsula took place, click:
http://graphics.thomsonreuters.com/RNGS/2010/NOV/KOREA.jpg
For a graphic of the components of Reuters Jeffries CRB
Index of commodities, click:
http://link.reuters.com/kew48n)
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Irish Prime Minister Brian Cowen defied 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. []
Expectations of a drawdown in U.S. crude stocks, reflecting
demand in the world's top energy consumer, could support prices.
Industry data from the United States due at 2130 GMT is
expected to show a third week of decline for crude inventories
following a surprise heavy drawdown in the previous week, a
Reuters poll showed on Monday. []
Traders were also watching the impact of a disruption to
some of Shell's crude oil 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 ageing 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. []
(Additional reporting by Florence Tan in Singapore; editing by
Jane Baird)
