* Wall Street slides on profit taking
* Product inventory build weighs
* Market eyes rockets fired on Israel
(Updates prices at settlement, adds detail)
By Edward McAllister
NEW YORK, Sept 11 (Reuters) - U.S. crude oil fell nearly 4
percent toward $69 a barrel on Friday as U.S. equities
struggled for traction, raising fears about the economy and a
recovery in energy demand.
U.S. crude for October delivery <CLc1> settled down $2.65
at $69.29, after rising to $72.90 in earlier trade. London
Brent crude <LCOc1> settled down $2.17 at $67.69 a barrel.
"Crude put in a high for the week, but there was no
follow-through and the dollar and S&P (500 stock index) turned
around and that helped pull crude back," said Gene McGillian,
analyst at Tradition Energy in Stamford, Connecticut.
Profit taking hampered U.S. stocks after five days of gains
and the longest winning streak since November, which helped
boost crude prices earlier in the week. []
Oil prices had charged ahead based on optimistic
expectations for a robust economic recovery despite
fundamentals such as weak demand, traders and analysts said.
Data released on Thursday by the U.S. government showed
petroleum product inventories, including heating oil and
gasoline, rose more than expected last week.
"Fuel demand has not recovered and the market needs to see
some demand after going up on sentiment," McGillian said.
Another factor oil traders said may have pressured prices
was Deutsche Bank's <DB.N> redemption of around $425 million in
double-long crude oil linked exchange-traded notes. The
leveraged notes' redemption was set to occur around Sept. 9.
Deutsche Bank declined to comment.
Data showed China's crude oil imports in August surged
about 25 percent to a near-record high of 19.6 million tonnes
or around 4.6 million barrels. []
Oil hit a year-high of $75 a barrel in late August, from
below $33 in December, as global oil demand recovered.
Crude's climb mirrored a rise in European equities
<>, which were headed for their sixth consecutive session
of gains.
Since March 9, equities and oil have traded in close
correlation.
For a graphic see:
http://graphics.thomsonreuters.com/099/CMD_BRNT20909.gif
At least two rockets were fired from southern Lebanon into
northern Israel, prompting an Israeli artillery response. This
heightened fears of regional instability and prompted earlier
crude buying, traders said. No casualties were reported.
[]
The International Energy Agency said that oil demand would
rise this year and next as the global economy recovers,
although it also said oil stocks in the big developed countries
of the OECD were up 4.6 percent in July versus a year ago.
[]
WEAK DOLLAR
The dollar index <.DXY>, a measure of the U.S. unit's
performance against six other major currencies, has dropped 1.9
percent in the past week. It briefly fell as low as 76.548 of
Friday, its lowest level since September 2008. []
Weakness in the dollar, the currency of the oil market, was
a concern for the Organization of the Petroleum Exporting
Countries. OPEC needs higher average oil prices to step up
investment in new output, its secretary-general said.
[]
The dollar's slide has helped boost demand for crude this
week, but an analyst at Commonwealth Bank said oil was unlikely
to get much more upward momentum from the greenback.
"Our forecast for currencies is for dollar depreciation --
a lot of that has occurred already and while depreciation has
been an upside driver, that influence may be weakening," said
David Moore, commodities strategist at Commonwealth Bank in
Sydney.
(Additional reporting by Gene Ramos and Robert Gibbons in New
York, Catherine Bosley in London, Nick Trevethan in Singapore;
Editing by David Gregorio)
