* Dollar firms and stocks fall on economic recovery doubts
* OPEC considers raising production in December
* Britain's Q3 GDP contraction bodes badly for fuel demand
(Updates throughout, adds byline and changes dateline from
previous LONDON.)
By Joshua Schneyer
NEW YORK, Oct 23 (Reuters) - Oil prices fell on Friday as a
stronger U.S. dollar and doubts over the pace of economic
recovery halted the commodity's recent rally.
The dollar <.DXY> gained against a basket of other
currencies, while the S&P stock index <.SPX> fell 1 percent, as
weak industrial sector earnings made investors question the
pace of an economic recovery.
"Oil is holding around $80 but the decline in equities
markets and a stronger dollar mean the rally in oil prices has
been stalled for now," said Gene McGillian, analyst at
Tradition Energy in Stamford, Connecticut.
U.S. crude <CLc1> for December delivery dropped 52 cents a
barrel to $80.67 by 1620 GMT, while Brent crude <LCOc1> dropped
53 cents to $78.98 a barrel.
Oil prices had risen to a one-year high of $82 earlier this
week, after rallying 17 percent since Oct. 10. The surging
prices coincided with a rise in global stock indices and a weak
dollar, which plunged to a 14-month low against a basket of
currencies this week. []
Oil, priced in dollars, remains cheap for holders of
foreign currencies and has been moving in an inverse price
relation against the dollar.
Optimism for an economic recovery spurs investment in
traditionally riskier assets like oil and stocks. That has
helped crude prices rise even though oil inventories remain
well above average levels. []
"The 'traditional fundamentals' are improving, but only
slowly," according to a Friday research note from Deutsche Bank
global oil economist Adam Sieminski.
Disappointing third-quarter earnings from industrial
companies like oilfield services giant Schlumberger <SLB.N> and
chip-maker Broadcom Corp <BRCM.O> triggered uncertainty over
the pace of economic recovery, sending U.S. stocks lower.
Data on Friday showed Britain's economy unexpectedly shrank
by 0.4 percent in the third quarter, roiling economist
expectations for a return to growth from the worst recession in
decades. []
That followed bearish U.S. economic data on Thursday, which
showed a larger-than expected rise in workers filing new claims
for jobless aid last week and pressured oil prices.
[]
In addition, OPEC Secretary General Abdullah al-Badri said
on Thursday the group, which pumps a third of the world's oil,
could consider raising production it meets in December.
[]
Al-Badri, who earlier this week called $80 oil "a bit
high," said OPEC would only consider raising production levels
if oil inventories shrank and there was "real economic growth."
Analysts said the OPEC comments could mean more oil
supplies are on the way, but it's uncertain whether global fuel
demand is increasing enough to warrant more production.
"OPEC may want to calm the market with more crude, but it's
not clear that refiners have an appetite to take it," Deutsche
Bank's Sieminski wrote in a note.
(Reporting by Joshua Schneyer; Additional reporting by Barbara
Lewis and Jane Grieve in London, and Nick Trevethan in
Singapore; Editing by Marguerita Choy)
