* Lack of evidence of real recovery curbs risk appetite
* Dollar weakness expected to provide limited support
* Fuel demand still tame, oil stocks still ample
(Updates throughout, changes dateline, pvs SINGAPORE)
By Barbara Lewis
LONDON, Oct 23 (Reuters) - Oil prices edged higher on
Friday, holding above $81 a barrel, but scepticism economic
recovery was robust enough to spur a convincing rise in fuel
demand curbed appetite to extend this week's powerful rally.
U.S. crude futures <CLc1> have rallied by around $10 a
barrel this month and hit a year-high of $82 a barrel this week,
partly driven by a wave of positive corporate earnings.
Economic data has also provided some evidence of economic
recovery and weekly government data showed a decrease in U.S.
stores of gasoline, but overall fuel inventories are still much
higher than a year ago. []
"If you go through the corporate earnings results, the top
line is still suggesting it's a difficult environment for
improving sales," said analyst Jane Foley of FOREX.com.
"Whilst we are in an economic recovery phase, the recovery
will be difficult."
U.S. crude for December rose 10 cents to $81.29 by 0934 GMT,
while London Brent crude <LCOc1> rose 15 cents to $79.66 a
barrel.
While the price of oil is rising in dollar terms, measured
in other currencies its performance is more modest.
(For related graphic, please click here
http://graphics.thomsonreuters.com/109/CMD_OILCUR1009.gif)
Against the euro, the dollar touched a new low for the year
after the euro breached the psychologically important $1.50
mark. []
DOLLAR WEAKNESS
The dollar's weakness has been cited as a major factor in an
oil rally that has pulled prices from a low of little more than
$30 a barrel in December last year, not least because
dollar-denominated oil is cheaper for non-dollar investors.
They have also moved out of the dollar and into riskier
assets such as oil and equities as a limited return of
confidence in the global economy has taken away the appeal of
the world's central reserve currency as a relatively safe haven.
Oil producing countries that have large dollar reserves and
receive income in petrodollars have voiced concern about dollar
weakness and the speculative element it has lured into oil
markets.
They do not object to a certain level of speculation, but
are nervous it could get out of control as they say it did when
oil prices hit a record of nearly $150 a barrel in July last
year, with the effect of destroying oil demand.
OPEC Secretary General Abdulla al-Badri said this week oil
prices at around $80 were "a bit high" given the state of the
world's economy.
He said the Organization of the Petroleum Exporting
Countries could consider raising output targets when it next met
in December, but only if inventories shrank and there was "real
economic growth". []
Whether those conditions will be met remains to be seen.
Data on Friday showed Britain's economy shrank in the third
quarter. []
Figures from France and Germany were more positive as German
manufacturing returned to growth [] and French
consumer spending rose. []
(Additional reporting by Nick Trevethan in Singapore; editing
by Christopher Johnson)
