* Dollar index at its lowest in almost 3 years
* Surprise U.S. crude draw boosts oil prices
* Coming Up: U.S. weekly jobless claims; 1230 GMT
* U.S. March leading indicator; 1400 GMT
By Francis Kan
SINGAPORE, April 21 (Reuters) - Brent crude climbed above
$124 a barrel on Thursday as U.S. crude inventories fell
unexpectedly last week and a sharply weaker dollar triggered a
rush into riskier assets.
The dollar struck its lowest in almost three years against a
basket of currencies , making dollar-denominated crude
less expensive for consumers using other currencies.
"The dollar was weaker and together with the inventory
numbers, these factors are supporting oil prices," said David
Cohen, Director of Asian Economic Forecasting at Action
Economics in Singapore.
ICE Brent crude <LCOc1> for June gained 67 cents to $124.52
a barrel by 0220 GMT. U.S. crude <CLc1> was up 76 cents at
$112.21 a barrel.
Reuters data showed the correlation between a weakening
dollar and rising oil prices has reached its most accentuated
level of 2011.
"The dollar will remain under pressure as the Fed implements
quantitative easing and other central banks start to tighten
rates," Cohen said.
A rally in equities has also boosted investor appetite for
commodities. Asian stocks were poised to hit a 3-year high on
Thursday, as investors scrambled to get in front of upward
momentum in higher-yielding assets, particularly in emerging
markets.
According to technical charts, Brent oil is expected to
revisit the April 11 high at $127.02 per barrel, while U.S. oil
could hit $113.46 a barrel as the long-term uptrend for these
two benchmarks have resumed, said Reuters market analyst Wang
Tao. [][]
Brent hit a 32-month high above $127 a barrel on April 11,
but concerns about high prices stifling world fuel demand has
cut gains since then.
International Energy Agency's executive director Nobuo Tanka
said on Wednesday that high oil prices have hurt demand in top
consumers China and the United States, and OPEC needs to raise
output around June to stem further price rises. []
However, Ecuador's oil minister said OPEC sees oil prices
between $80 to $90 as "adequate" and had no plans for an
emergency meeting because the market was well supplied despite
unrest in Libya. []
U.S. OIL DATA
U.S. crude inventories unexpectedly fell 2.32 million
barrels last week, bucking average analyst forecasts in a
Reuters poll for a 1.1 million barrel increase. It was the first
draw down since the week to Feb. 25.
Stocks of gasoline shed 1.58 million barrels to 208.1
million barrels, in line with analyst expectations for a 1.5
million-barrel draw. Gasoline stocks were down even as U.S.
gasoline demand fell by 1.8 percent on average over the last
four weeks versus the same period of 2010, EIA said.
"The overhang of US crude and oil product inventories... is
now at its lowest level since the end of 2008. Cushing
inventories have fallen, and we continue to see WTI as being
underpriced relative to Brent," said analysts at Barclays
Capital in a research note.
The popular West Texas Intermediate (WTI) crude <CLc1>
benchmark has been hampered by storage issues at Cushing,
Oklahoma, the delivery point for U.S. futures, where inventories
hit record levels last year because of rising supplies from
Canada via pipelines.
Brent crude's premium over WTI fell 10 cents to $12.30 a
barrel by 0221 GMT, having narrowed from over $16.00 last week.
Analysts point to the large U.S. draw down and signs of firm
Chinese demand as evidence that worries over a sharp drop in oil
demand due to higher prices may be premature.
"Concerns about a major collapse in oil demand seem
misplaced at this point given the performance of demand in Q1,"
said the Barclays Capital report.
China's implied oil demand grew by double digits for the
sixth consecutive month in March, but was down from February as
refineries scaled back runs on maintenance and soaring crude
costs. []
(Editing by Himani Sarkar)
