* Eurozone debt contagion fears persist despite Irish rescue
* Volume light, U.S. markets close for federal holiday
(Updates prices, adds quote)
By Zaida Espana
LONDON, Nov 25 (Reuters) - Oil inched up on Thursday,
holding a tight range in thin trading due to a U.S. holiday,
with the upside capped by persistent worries about the euro zone
and concerns about China's inflation prospects.
By 1437 U.S. crude for January <CLc1> was up 46 cents at
$84.32 a barrel by 1132 GMT, after plumbing lows of $83.45
earlier.
ICE Brent <LCOc1> rose 41 cents to $86.25.
After Wednesday's 3.2 percent gains, analysts expect prices
to remain range-bound in thin volume, as the New York Mercantile
Exchange (NYMEX) combines trades for Nov. 25 and Nov. 26 into
one trading session because of Thursday's Thanksgiving holiday.
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Continued worries about the ability of peripheral euro zone
members to manage their debt weighed on the euro, which remained
close to a two-month low.
With worries that future oil demand growth from China could
be tempered by measures to curb inflation, analysts currently
see oil price support at around $80 a barrel.
"The risks for the market, including Ireland and (the threat
of conflict in) Korea are still there, and yesterday's DOE
report was also quite bearish, so I can't find any convincing
reason why oil prices climbed to $84," Commerzbank oil analyst
Carsten Fritsch said, although he sees support at $80 a barrel.
"Technically, the action of the last two days definitely
print out a very strong defence of 80.50 $/bbl as a support,"
Petromatrix' Olivier Jakob said in a note.
Trading volume was over 28,200 lots by 1434 GMT, compared to
an average daily trading of around 315,000 lots over the past
year, according to Reuters calculations, held down by Thursday's
U.S. Thanksgiving holiday.
"Changes throughout the trading session may prove to be more
erratic due to lower liquidity as result of U.S. markets being
closed for Thanksgiving," BNP Paribas' head of commodity
markets' strategy Harry Tchilinguirian said.
DOLLAR DISCONNECTION
The dollar index <=USD>, a measure of its performance
against six other major currencies, inched up by 0.18 percent.
Oil prices, which typically trade in negative correlation to
the greenback, have seen the correlation break recently.
"Once again yesterday, we saw a disconnect between the
dollar and commodity prices in yesterday's trading," MF Global
senior commodities analyst Edward Meir said.
Oil tumbled to 2010 lows under $65 in May as the Greek debt
crisis dampened confidence about the global economic recovery,
and rebounded to a two-year high of $88.63 on Nov. 11.
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For an interactive timeline of the euro zone debt crisis
http://link.reuters.com/kar27p
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Earlier this week, prices dropped to near $80 after North
Korea's deadly artillery barrage against a South Korean island
that boosted the value of the dollar and reduced the appetite
for riskier commodity assets.
(Additional reporting by Alejandro Barbajosa in Singapore;
editing by Keiron Henderson)
