By Ga-Woon Philip Vahn Of DOW JONES NEWSWIRES SINGAPORE (Dow Jones)--Crude-oil futures fell in Asia Friday, extending a sharp overnight selloff in New York, as investors shifted their attention back to euro-zone debt problems from an improved demand outlook in the U.S. On the New York Mercantile Exchange, light, sweet crude futures for delivery in December traded at $98.51 a barrel at 0715 GMT, down $0.31 in the Globex electronic session. January Brent crude on London's ICE Futures exchange fell $0.15 to $108.07 a barrel. The U.S. oil benchmark spiked to a five-and-a-half-month high of $103.37 a barrel Thursday on the back of plans to reverse the flow in a pipeline, which would ease supply pressure on stocks at Cushing, Okla.--the delivery point for Nymex futures--but the rally proved short-lived, as rising borrowing costs in euro zone kept investors on their toes, making growth-sensitive assets like oil vulnerable to any fresh waves of risk aversion. Spain was the latest headline maker in Europe, as it was forced to offer record euro-era yields at its government bond auction Thursday, having to pay an average yield of 6.975% to issue a total of EUR3.563 billion in 10-year bonds. Crude prices "remain subject to the vagaries of increasing debt problems across the Southern euro zone," Ritterbusch and Assoc. said in a note. "As long as bond yields in Greece, Italy and Spain remain elevated at exceptionally high levels, the oil complex will remain vulnerable to sharp price drops," the consultancy said. Market participants said the U.S. has its own debt issues to resolve, and if Washington fails to reach a deficit-reduction deal, the oil market may have to look for further downside. "It's not just Europe," J.P. Morgan said in a research note. "The bottom line is that four months after the markets started to really fret about financial and economic risks in the Atlantic Basin, we have still not reached the resolution point. We may be closer, but economic risks to the oil market over the next two weeks will be considerable." Nymex reformulated gasoline blendstock for December--the benchmark gasoline contract--fell 76 points to $2.4995 a gallon, while December heating oil traded at $3.0817, 15 points lower. ICE gasoil for December changed hands at $969.50 a metric ton, down $3.50 from Thursday's settlement. -By Ga-Woon Philip Vahn, Dow Jones Newswires; +65-64154149; philip.vahn@dowjones.com

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