SINGAPORE, Oct 26 (Reuters) - Oil pared early losses on
Tuesday as the dollar retreated from session highs, but prices
remained capped by forecasts showing U.S. crude inventories
rose for the third time in four weeks last week.
The inverse correlation between the dollar and oil has
become deeply entrenched over the past few days as investors
buy emerging-market shares whenever the greenback drops.
Consequently, the direct correlation between U.S. crude and
the euro on Monday jumped to its highest since March, after
investors calculated that a Group of 20 meeting that produced
no firm policy initiatives would leave market trends unchanged.
FUNDAMENTALS
* U.S. crude for December <CLc1> slid 3 cents to $82.49 a
barrel at 0105 GMT, after earlier dipping to as low as $82.05.
* Oil on Monday climbed as the dollar weakened and sales of
previously owned U.S. homes rose a greater-than-expected 10
percent in September, though they remained at depressed levels
that point to a painful and protracted recovery for the housing
market.
* Crude stockpiles in the U.S. probably rose by 1.4 million
barrels the week ended Oct. 22 as imports piled up, a Reuters
poll showed on Monday. []
* The gain in crude inventories was likely limited by
higher refinery demand as refinery utilization probably rose
0.3 percentage point, to 82.8 percent of capacity.
* Inventories for the two main categories of refined
products likely went on opposite directions last week, with
distillate stockpiles predicted to have dropped by 1.9 million
barrels for a fourth consecutive week of declines and gasoline
inventories seen rising by 500,000 barrels for a second
straight week of gains.
* Prolonged strikes in France probably dragged larger
amounts of distillate fuel from the U.S., contributing to the
expected stockdraw, analysts said.
* Industry group the American Petroleum Institute (API)
will release its inventory report on Tuesday at 2030 GMT, while
government statistics from the U.S. Energy Information
Administration will follow on Wednesday at 1430 GMT.
MARKETS NEWS
* The U.S. dollar steadied above a 15-year low versus the
yen in early Asia trade on Tuesday, while the euro came under
some pressure after failing to hold above $1.4000 again. []
* With the U.S. Federal Reserve set to pump more money as
early as next week to spur a flagging economy but still no
clear consensus on how much cash they will inject, analysts
expect the dollar to stay choppy.
* Keeping the market guessing, New York Fed President
William Dudley said whether an incremental or big bang approach
to asset purchases by the Fed would work better depends on the
economic context. Dudley also said he would put very little
weight on what the market is pricing in. []
* Japan's Nikkei average edged lower on Tuesday as the yen
stayed near a 15-year high against the dollar, but many
investors took a wait-and-see stance as Japanese firms were
heading into the peak of their earnings reporting. []
DATA/EVENTS
* The following data is expected on Tuesday:
- 0830 U.K. GDP prelim qq Q3 <GBGDP=ECI>
- 1145 U.S. ICSC chain stores yy Weekly <USUBSY=ECI>
- 1400 U.S. Consumer confidence Oct <USCONC=ECI>
- 2030 U.S. API weekly oil stocks Oct 22 <USOIAC=ECI>
RELATED NEWS
* Workers at eight out of France's 12 refineries voted to
continue striking over pensions on Monday, but three of the
other five plants voted to end action, union officials said.
[]
* The eight plants to have voted already to prolong
stoppages included all six of Total's <TOTF.PA> French
refineries, as well as Ineos' Lavera plant and Petroplus' Petit
Couronne plant.
* Tropical Storm Richard weakened to a tropical depression
on Monday as it moved across southern Mexico and headed for the
Bay of Campeche, but did not look to pose a major threat to
Mexican or U.S. oil operations. []
(Reporting by Alejandro Barbajosa; Editing by Manash Goswami)
