* Iran war games aim to protect nuclear facilities
* Dollar edges down 0.5 pct against basket of currencies
* Investors eye data in holiday-thin week for recovery
clues
* China Oct apparent crude demand up 10 pct on year
(Recasts, updates prices, analyst's comments)
By Fayen Wong
PERTH, Nov 23 (Reuters) - Oil prices rose more than 1
percent to top $78 a barrel on Monday, after the U.S. dollar
lost its footing and heightened tensions between key oil
exporter Iran and Western nations raised speculation of a
potential supply threat.
The dollar, down 0.5 percent against a basket of currencies
<.DXY>, was also a key factor in driving up prices of other
commodities, with gold <XAU=> powering to a fresh record high
of more than $1,160 an ounce. []
Investors typically buy commodities as a hedge against
inflation and a weaker U.S. currency.
U.S. crude for January delivery rose 96 cents to $78.43 a
barrel by 0736 GMT, after having risen by $1 earlier. London
Brent crude <LCOc1> rose $1.04 to $78.24.
"The rising Iran tensions, alongside U.S. dollar weakness
and gold's record high levels, have helped buoy oil prices,"
said Michelle Kwek, an analyst at Informa Global Markets in
Singapore.
Iran's armed forces launched air defence war games on
Sunday to show off the country's deterrence capabilities in the
face of Western pressure over its nuclear programme, and a
cleric in the Revolutionary Guards warned the Islamic republic
would fire missiles at "the heart of Tel Aviv" if attacked.
[] []
The threats came a day after senior officials from six
world powers said they were disappointed Iran had not accepted
proposals intended to delay its potential to make nuclear
weapons, with U.S. President Barack Obama having warned that
there could be a package of sanctions against Iran within
weeks.
While energy demand in the United States remains sluggish,
crude consumption in China, the world's No. 2 oil consumer, has
rebounded strongly in recent months as its economy looks poised
to post an impressive growth of around 8 percent this year.
China's apparent oil demand in October rose 10.3 percent
from a year earlier, the seventh rise in a row, as refiners
produced at record rates among more signs of a solid recovery
in the world third-largest economy. []
Oil prices have gained about 75 percent so far this year,
thanks to the weak dollar and signs of a global economic
recovery, but they are still nearly 47 percent off their high
of more than $147 a barrel in July 2008.
Analysts said oil prices have been trading within the
$75-$82 band of the past one month and would need a lot more
upside pressure to leap out of the $82 levels.
Barclays Capital said in a research note on Friday the
upside would also probably be capped by OPEC, which has
indicated that any quick run-up in prices is likely to be met
by a proactive approach to calm them, and until distillate
demand showed some sustained improvements.
With a raft of economic data on tap in the United
States in a holiday-thinned week, including existing home sales
on Monday, revised GDP figures on Tuesday and the minutes of
Fed's last policy meeting the day after, investors are set to
scrutinise the numbers for signs of economic activity perking
up in the world's top oil consumer.
Money managers boosted net long crude oil positions on the
New York Mercantile Exchange in the week through Nov. 17, the
Commodity Futures Trading Commission said in a report on
Friday. []
(Reporting by Fayen Wong; Editing by Clarence Fernandez)
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Messaging: fayen.wong.reuters.com@reuters.net))
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