* Oil's 10-day rise snapped after 15-month high
* China central bank tightening hits commodities
* Forecasts of sustained cold weather to underpin prices
(Updates prices, market activity)
By Matthew Robinson
NEW YORK, Jan 7 (Reuters) - Oil fell from 15-month highs to
below $83 a barrel on Thursday on the stronger dollar and as
signs of tighter monetary policy in China sparked concerns
about demand in the world's second largest energy consumer.
China's central bank surprised markets by raising the
interest rate in a three-month bill auction, which the markets
took as a signal of policy tightening, putting pressure on
commodities and clipping 10 straight days of gains for oil.
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China triggers sell-off: http://link.reuters.com/vys32h
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China's rapidly expanding economy and its burgeoning thirst
for oil has been seen as one of the main reasons crude prices
have more than doubled in the past 12 months, despite the
lingering impact of the economic crisis.
U.S. crude for February delivery <CLc1> fell 52 cents to
settle at $82.66 a barrel, off Wednesday's 15-month high of
$83.52. London Brent crude <LCOc1> fell 38 cents to settle at
$81.51 a barrel.
"Crude oil edged lower on speculation that China's move to
slow bank lending may reduce commodity demand in the country,"
Addison Armstrong, analyst at Tradition Energy in Stamford,
Connecticut, said in a note.
Crude had shrugged off news of higher U.S. oil inventories
on Wednesday to post its 10th straight session of gains,
extending a near $11 rally on expectations freezing
temperatures across much of the United States would eventually
cut into bulging stocks.
Arctic winds have pushed down into the Northern Hemisphere,
freezing Europe and parts of Asia, and boosted demand for
heating in the United States some 21 percent above normal.
European energy demand has also surged, especially in
Britain and France, while heavy snow and record low
temperatures in China prompted cities across eastern and
central parts of the country to begin rationing power.
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Further pressure on crude came as the U.S. dollar rose
against the euro and yen, underpinned by weak German and
euro-zone data as well as by comments from Japan's new finance
minister that he wanted the yen to weaken more. []
Over the past year, oil prices have frequently weakened as
the dollar firmed, at times signaling a flight to safer havens
by investors. Oil markets have also been looking to wider
economic data for positive signs that could boost demand.
The number of U.S. workers filing new jobless claims edged
up by a slim 1,000 last week and a gauge of underlying labor
market trends hit a nearly 16-month low, evidence the job
market continues to heal. []
Monthly non-farm payrolls data on Friday will give a
further indication of the pace of recovery in the world's top
energy consumer.
The Dow and the S&P 500 rose on Thursday after Bank of
America <BAC.N> and General Electric <GE.N> rallied on positive
broker comments, while the Nasdaq slipped as investors were
cautious a day before the release of the payrolls data.
Thursday's decline in oil prices was somewhat offset by
rising investment funds into crude and other commodity markets
on expectations the asset class would extend last year's strong
performance as the global economy rebounds. []
The market has also been watching continuing talks between
Belarus and Russia over the supply of Russian oil for 2010.
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Russia briefly cut oil supplies to Belarussian refineries
in a dispute over pricing that raised the prospect of supply
disruptions for European Union customers, helping to lift oil
prices this week.
(Additional reporting by Robert Gibbons and Gene Ramos in New
York, Jennifer Tan in Singapore and David Sheppard in London;
Editing by Christian Wiessner)
