* Oil prices fall nearly 5 pct from Wednesday settlement
* Dubai debt delay revives financial crisis fears
* Dollar jumps as investors trim risk exposure
(Updates prices, adds comment)
By Chris Baldwin
LONDON, Nov 27 (Reuters) - Oil prices sank to six-week lows
below $75 a barrel on Friday as fears that Dubai could default
convulsed financial markets and the dollar rose as investors
moved into safer assets.
U.S. crude for January delivery <CLc1> was $74.62 a barrel
by 1302 GMT in electronic trading, up from a low of $72.39 in
early trade, but nearly 5 percent below Wednesday's settlement.
There was no settlement price on Thursday because U.S. markets
were closed for Thanksgiving.
London Brent crude <LCOc1> fell $1.18 to $75.81.
"Oil reacted in relation to equity markets and a stronger
dollar. Some of the exaggeration is coming from lower liquidity
on the market because of the holiday," said Harry
Tchilinguirian, senior commodity analyst at BNP Paribas.
"In terms of fundamentals, nothing has changed in the
market. But the knock-on of cross-asset movement has increased
since the introduction of quantitative easing."
OTHER MARKETS
European stocks were flat on the day, having fallen at the
open <> on easing concerns over the exposure to Dubai's
debt crisis held in European banks.
The euro was down 0.6 percent against the U.S. currency as
investors trimmed risk exposure.[] A stronger dollar
diminishes the appeal for some investors of oil and commodities
priced in the U.S. currency.
Dubai has asked for a debt standstill on tens of billions of
dollars as part of a restructuring, sparking debt default fears
that could hit other parts of the global economy and derail a
fledgling recovery from 2008's global financial crisis.
[]
POTENTIAL DOMINO EFFECT
"The Dubai situation is very worrying and people are
obviously worried about a potential domino effect if Dubai can't
pay off their debt," said Benson Wang, senior adviser at
Commodity Broking Services in Sydney.
"This episode has destroyed the confidence between borrowers
and lenders and it has also shaken the confidence about the pace
of a global economic recovery."
[]
The New York Mercantile Exchange will have a shortened floor
trading session on Friday.
Traders said Thursday's thin volumes and lack of a U.S.
crude settlement could also be exaggerating Friday's oil price
move.
"People are coming in to work, reading the papers, absorbing
the news from Dubai," said Tony Machacek, a broker at Bache
Commodities in London.
"We've seen such a substantial continuation move because the
funds are heavily long in commodities and the euro, and the drop
has triggered some technical liquidation. You really have to
gauge it on Brent."
Oil prices have so far fallen about 10 percent since
striking a year high of $82 early last month, as lacklustre
economic data and bulging fuel inventories in the United States
combine to dent hopes of a swift recovery in energy demand.
(Additional reporting by Fayen Wong in Perth; editing by
Anthony Barker)
((christopher.baldwin@reuters.com; +442075427526))
