* Oil prices fall 2.5 pct from Wednesday settlement
* Dubai debt delay revives financial crisis fears
* Dollar jumps as investors trim risk exposure
(Recasts, updates with settlement price)
By Rebekah Kebede
NEW YORK, Nov 27 (Reuters) - Oil prices settled down more than 2
percent at about $76 a barrel on Friday as fears of possible defaults in
Dubai convulsed financial markets and boosted safe-haven demand for the
U.S. dollar.
U.S. crude for January delivery <CLc1> fell $1.91 to $76.05 a barrel,
2.5 percent below Wednesday's settlement.
U.S. markets were closed on Thursday for the Thanksgiving holiday.
London Brent crude <LCOc1> rose 19 cents to $77.18 from Thursday's
settlement price.
Crude oil markets have looked to wider macro-economic data and equities
markets for signs of an economic recovery that could lift oil demand.
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
financial crisis. []
"This is a similar reaction to last year's Lehman Brothers debacle, it
shakes confidence in financial markets and raises the specter of contagion
which could trigger a second wave in the credit crisis," Mike Fitzpatrick,
vice president at MF Global in New York, said in a Friday research note.
Major U.S. indexes dropped after markets opened on Friday, the NASDAQ
<> falling 1.73 percent and the S&P 500 down 19.14 points, or 1.72
percent to 1.091.49. Investors began seeking refuge in government bonds.
<MKTS GLOB>
For a graphic on risk assets hit by Dubai debt fears, click on:
http://graphics.thomsonreuters.com/119/GLB_RSKA1109.gif
The U.S. dollar also pressured oil prices as concerns about the
possibility of a debt default in Dubai boosted safe-haven demand for the
greenback. []
A stronger dollar weighs on demand for commodities such as oil that are
denominated in the U.S. currency.
In earlier trading, crude sank as low as $72.39 a barrel, but recovered
slightly after Wall Street tempered its losses.
"The dollar pared its gain and the stock market its losses so crude did
also," said Mark Waggoner, president at Excel Futures Inc in Huntington
Beach, California.
Oil prices have fallen nearly 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.
Traders said thin volumes on Thursday and Friday due to the
Thanksgiving holiday could also be exaggerating Friday's oil price move.
The New York Mercantile Exchange will have a shortened floor trading
session on Friday.
(Additional reporting by Robert Gibbons in New York, Chris Baldwin in
London, and Fayen Wong in Perth; editing by Marguerita Choy)
((rebekah.kebede@thomsonreuters.com; Reuters Messaging:
rebekah.kebede.reuters.com@reuters.net))
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