Brent slips below $111 on Europe's debt worries

SINGAPORE: Brent crude futures slipped more than $1 in early Asian trade on Thursday on concerns about demand growth, as France and Germany clash over the role the European Central Bank should adopt to rein in the region's sovereign debt crisis.

As the picture in Europe turned gloomier, investors turned their attention to the world's top oil consumer, the United States, for clues to demand outlook, following a series of positive economic numbers. The US benchmark on Wednesday closed above $100 for the first time since June, on news of a critical pipeline reversal that will help ease a glut in the Midwest.

Brent crude slipped $1.04 a barrel to $110.84 by 0223 GMT, while US crude fell 71 cents to $101.88 as investors booked profits after the contract surged more than $3 in the previous session in the most active trading session since Libya's civil war erupted in February.

"We are beginning to see a decoupling between the United States and Europe because of the recent series of positive economic data," said Tetsu Emori, a fund manager at Astmax Co Ltd in Tokyo. "Earlier talk was about global demand, but it is now more about US demand as that economy is getting better."

Adding to the series of positive numbers, industrial output in the world's biggest economy rebounded strongly, suggesting the economy is gaining steam, while consumer prices fell in October for the first time in four months.

Data showing a slide in crude oil inventories in the United States also helped support prices. Crude stockpiles fell 1.1 million barrels, down for a second straight week, while distillate supplies, which include heating oil and diesel fuel, dropped for the seventh consecutive week.

Brent will fall further to $108 per barrel, as it dropped below a triangle, while US oil may surge further towards $106 per barrel, as the current strong bullish momentum could push the price out of a narrow rising channel, according to Reuters market analyst Wang Tao.

In Europe, France and Germany, the region's two key powers, have stepped up their war of words over whether the European Central Bank should intervene more forcefully to halt the euro zone's debt crisis after modest bond purchases failed to calm markets.

Facing rising borrowing costs as its 'AAA' credit rating comes under threat, France urged stronger ECB action, adding to mounting global pressure spelled out by US President Barack Obama.