* Oil, dollar seesaw as Federal Reserve meets
* Retail sales data supports equities, investor optimism
* Coming up: API oil inventory data, 4:30 p.m. EST Tuesday
(Recasts, updates market activity and prices and changes
dateline, previously LONDON)
By Robert Gibbons
NEW YORK, Dec 14 (Reuters) - Oil edged higher on Tuesday,
seesawing with the dollar and consolidating recent gains while
awaiting results from the year's final Federal Reserve meeting
and weekly oil inventory reports.
Wall Street equities and the dollar received lift from news
that U.S. retail sales increased 0.8 percent in November,
advancing for a fifth straight month, and that core producer
prices also rose 0.3 percent, suggesting an acceleration in
economic growth. []
But the bounce by the dollar index <.DXY>, which weighed on
oil prices, was not sustained as currency markets also eyed the
Federal Reserve meeting.
Fed officials met to assess their bond-buying plan against
the backdrop of the tentative agreement to extend Bush-era tax
cuts, which could help their push to lift U.S. economic growth.
[]
U.S. crude for January delivery <CLc1> rose 9 cents to
$88.70 a barrel at 12:43 a.m. EST (1743 GMT), having seesawed
between $87.74 and $88.95.
Prices reached a 26-month high of $90.76 on Dec. 7.
"People are looking at the Fed meeting for clues if there
will be further help to boost the economy and awaiting
inventory data. As the front-month crude nears expiration, you
will see a sell-off," Mark Waggoner, president at Excel Futures
in Bend, Oregon.
January crude futures options on the New York Mercantile
Exchange expire on Wednesday, ahead of the January contract's
expiration on Dec. 20.
Total U.S. crude trading volume was above 400,000 lots
during the noon hour in New York on Tuesday, putting it easy
reach of the previous session's 589,228 lots traded and the
30-day average of 667,478 lots.
ICE Brent crude for January <LCOc1> rose 34 cents to $91.53
a barrel, trading between $90.68 and $91.71. The January Brent
contract expires on Thursday.
Brent prices were supported by news that daily crude oil
output from nine of the main North Sea streams will fall by
more than 5 percent in January, according to data compiled on
Tuesday from trading sources. []
Strong Chinese implied oil demand for November
[] has bolstered demand expectations even as
investors remain cautious after China did not raise interest
rates despite data at the weekend pegging November inflation at
a 28-month high.
The positive sentiment in financial markets will not,
however, be enough to sustain an oil price above $90 unless
supported by strong fundamentals while downside financial risk
from the European debt crisis remains, analysts warned.
"The support is coming from the financial side. I would not
be surprised to see the oil prices stagnating or even falling
(in the coming days)," Eugen Weinberg, head of commodity
research at Commerzbank in Frankfurt told Reuters, adding that
supply and demand did not justify the current price levels.
Credit Suisse on Tuesday became the latest bank to lift its
oil price forecast, raising its 2011 forecast for U.S. crude
futures to $85 per barrel, an increase of $12.50, citing a
recovery in global oil demand. []
The price forecast was raised "to reflect a recovery in
OECD demand (notably in North America) and continued strength
in the non-OECD (notably Asia)," the bank said in a note.
Credit Suisse also increased its 2011 ICE Brent price
outlook by $12.7 per barrel to $84.50.
EYEING U.S. OIL INVENTORIES
U.S. crude oil futures were expected to have declined 2.2
million barrels in the week to Dec. 10, according to a Reuters
preliminary survey of analysts on Monday. []
But gasoline stockpiles were expected to be up 1.8 million
barrels, while distillate inventories were forecast to be down
500,000 barrels.
U.S. gasoline futures <RBc1> also seesawed on Tuesday, with
expectations that rising stockpiles will ease supply tightness
in the New York Harbor region, delivery point for the gasoline
contract.
Distillate stocks will be eyed to see the impact on
stockpiles as cold weather in the U.S. Midwest and Northeast
and northern Europe boosted heating fuel demand and U.S.
heating oil futures <HOc1>, and with the regions' temperatures
still near or below normal. [] []
(Additional reporting by Gene Ramos in New York, Una Galani in
London and Rebekah Kebede in Perth; Editing by David Gregorio)
