* Oil's correlation with euro strongest since March
* Technicals show oil to rise towards $84.50
[]
* Coming Up: U.S. API oil inventory weekly report; 2030 GMT
By Alejandro Barbajosa
SINGAPORE, Oct 26 (Reuters) - Oil fell towards $82 on
Tuesday, under pressure from an expected gain in U.S. crude
stockpiles for three out of four weeks and a stronger dollar,
as the currency's volatility exposed the market to price
swings.
Crude pared early losses as the dollar retreated from
session highs, then fell back as the greenback recovered, with
markets focused on the U.S. Federal Reserve carrying out a
fresh round of monetary stimulus as early as next week.
U.S. crude for December <CLc1> fell 39 cents to $82.13 at
0247 GMT, after earlier dipping by as much as 0.6 percent to
$82.05 a barrel, still less than $3 from a five-month high of
$84.43 on Oct. 7. ICE Brent <LCOc1> slid 25 cents to $83.29.
"It could be the oil market is just taking a breather and
will just trade range-bound today," said Serene Lim, a
Singapore-based oil analyst at ANZ.
"But there is still so much talk of quantitivate easing and
excess liquidity coming into the market and that will push
commodities higher. We still have high commercial inventories
and high OPEC spare capacity, so that will be capping
investors' appetite for oil."
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.
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.
RISING U.S. SUPPLIES
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.
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. []
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. []
China will raise retail fuel prices by about 3 percent from
Tuesday in its first hike in seven months, a move bringing
prices back to near record highs but unlikely to dampen oil
demand in the world number-two consumer. []
(Editing by Manash Goswami)
