Oil prices extended their decline from the previous day to fall to USD 76 a barrel on Friday, as debt problems in Dubai rattled investors and spurred nervous traders to take profit from the fuel's recent rally.
Dubai has asked creditors of two of its flagship firms for a standstill on debt running into tens of billions of dollars as part of restructuring Dubai World, the conglomerate that spearheaded the emirate's growth.
Data painting a gloomy economic outlook in Japan, the world's third-largest energy consumer, put further stress on oil prices.
US crude for January delivery stood at USD 76.02 a barrel by 0339 GMT in electronic trading, down 38 cents from earlier on Friday. There was no settlement price on Thursday because NYMEX was closed for the US Thanksgiving holiday.
The New York Mercantile Exchange will have a shortened floor trading session on Friday.
"The bulk of the downside moves were overnight in Europe on the Dubai default shudders, but Asia trade is thin and nervous and is consolidating on the day's lows," Informa Global Markets said in a research note, adding there was modest support at USD 76 levels.
Debt problems in Dubai have also struck Asian financial markets hard on Friday, dragging Japan's Nikkei index to a four-month low, amid concerns about bank's potential exposure to any bad debt in the Gulf.
Prices of commodities, including gold and grains, also moved lower on the US dollar rebound, as investors shied away from riskier assets.
The dollar index gained 0.3% against a basket of currencies, and recovered slightly from a fresh 14-year low against the yen.
Adding to the bad news, the latest data from Japan showed its consumer price index slid in the year to October at its fastest rate since 2001, with increasing signs of weak demand weighing on prices.
Oil prices have fallen about 7% since striking a year-high of USD 82 early last month, as a string of lacklustre economic data and bulging fuel inventories in the United States combine to dent hopes of a swift recovery in energy demand.
