(Refiles to insert dropped word in para 3)
* Oil posts $5 drop since Monday on economy, demand,
supplies
* Downbeat U.S. economic data seen a dampener
* CFTC rules seen not as strict as expected, relief for now
By Alejandro Barbajosa
SINGAPORE, Jan 15 (Reuters) - Oil fell below $79 a barrel
on Friday and was set for its first weekly drop in more than a
month, as disappointing economic data added to expectations for
reduced heating demand in the United States.
U.S. retail sales declined in December for the first time
in three months, the Commerce Department said on Thursday,
while Labor Department data showed more people sought jobless
benefits last week.
Prices edged up briefly a day earlier after U.S. regulators
announced proposals to put a hard cap on the size of positions
dealers can hold, aiming to limit speculation, as traders
considered it not as stringent as feared. The market was also
seeking more details on the rules before making further moves.
U.S. crude oil futures for February delivery <CLc1> fell 44
cents to $78.95 a barrel at 0342 GMT. Prices have shed about $5
from a 15-month intraday high of $83.95 on Monday, having
touched a 2010 low of $78.37 two days ago.
The new front-month March contract for London Brent crude
<LCOc1> slid 53 cents to $78.04.
"The fundamentals are weak," said Tetsu Emori, a fund
manager at Tokyo-based Astmax Co Ltd. "U.S. economic data is
not really improving much and this may push down NYMEX prices
to below $78."
MORE DETAILS NEEDED ON REGULATION
The long-awaited proposals from the U.S. Commodity Futures
Trading Commission (CFTC) will apply to the four most-traded
energy contracts on the two major exchanges, NYMEX and ICE.
It remains to be seen if the limits -- which the CFTC said
would affect only the 10 biggest position holders if
implemented immediately -- are enough to satisfy Congress
members who have clamoured for regulatory action since oil
prices jumped to a record above $147 in July 2008.
Emori said it was too early to say whether the new
regulation will affect the market or prices. "We probably need
some more details on how they will regulate each category of
participants," he said.
"It is quite difficult for them to distinguish which part of a
bank's trading activity is hedging or speculation."
Crude and fuel inventories at top consuming nation the
United States rose last week despite unusually cold weather.
Temperatures are now forecast to exceed the seasonal norm,
suppressing consumption.
U.S. demand for distillates, a fuel category which includes
heating oil, was 4 percent below year-earlier levels in the
four weeks ended Jan. 8, a government report showed on
Wednesday.
"Stockpiles are rising and demand is lower than expected,"
Emori said.
U.S. economic activity is now at a low level but is showing
signs of modest improvement, the Federal Reserve said on
Wednesday in remarks seen as reinforcing the prevailing view
that oil demand will grow in 2010. []
But recent downbeat data and the view that U.S. interest
rates will remain low for a while sent the dollar to a
one-month low against sterling. The U.S. dollar also took a hit
versus currencies leveraged to global growth such as the
Australian and Canadian dollars on positive earnings from
tech-bellweather Intel Corp. []
(Editing by Ramthan Hussain)
