* Price reaction to weak dollar muted at top of trading
range
* Japanese industrial production falls 1st time in 12
months
* Coming Up: U.S. inventory report from API, 2030 GMT
By Alejandro Barbajosa
SINGAPORE, March 30 (Reuters) - Oil was steady above $82 on
Tuesday after hitting the highest level in almost two weeks a
day earlier on optimism about the global economic recovery.
U.S. crude for May delivery <CLc1> slid 2 cents to $82.15 a
barrel at 0342 GMT, while Ice Brent <LCOc1> rose 3 cents to
$81.20 in London.
Prices have traded in a range between $69 and $84 this
quarter, touching $82.78 on Monday, the highest intra-day price
since March 18.
A falling dollar on Monday boosted the purchasing power for
the dollar-denominated commodities outside the U.S., reflecting
the usual inverse correlation between the U.S. currency and
oil.
But on Tuesday oil prices failed to react to further dollar
weakness, while Japanese industrial production fell for the
first time in 12 months, raising some concern about the pace of
recovery in OECD economies.
"A weaker U.S. dollar will normally be helpful to the oil
price, but at the top of the established trading range for the
past month there has been hesitancy on the part of buyers,"
said David Moore, Commodity Strategist at the Commonwealth Bank
of Australia in Sydney. "They are becoming more cautious."
"Recent trading ranges create expectations. When the price
gets close to the top, it falls back again. The market is not
especially tight and the fundamentals that would underpin a
sustained rise are not really in place," Moore said.
U.S. crude inventories probably climbed by 2.6 million
barrels last week, posting their ninth consecutive weekly
increase, a Reuters poll showed on Monday. []
The American Petroleum Institute (API) will publish
stockpile data gathered from industry players later on Tuesday,
while government statistics from the Energy Information
Administration (EIA) will follow on Wednesday.
U.S. gasoline stocks were projected to be down by 1.7
million barrels, with distillate stocks, which include heating
oil and diesel, down by 1.4 million barrels, according to the
poll.
The drop in U.S. product inventories may accelerate in the
second half of the year, Moore said, setting the stage for
higher prices above $90 a barrel next year.
Oil in floating storage has dropped 24 million barrels from
its peak in November 2009, Goldman Sachs said in a report dated
March 29.
"We expect the supply-demand balance to continue to tighten
in 2010 as the global economic recovery continues to strengthen
demand, draw inventories and draw OPEC spare capacity back into
the market," Goldman analysts led by Jeffrey Currie said in the
report.
(Editing by Ed Lane)
