Oil falls for 3rd day to below $80 on recovery concerns

                                
 * Oil falls below $80, economic recovery in focus
                                
 * U.S. dlr makes modest gain on rate hike speculations
                                
 By Fayen Wong
                                
 PERTH, Oct 26 (Reuters) - Oil fell for the third day, to
below $80 a barrel on Monday, extending the previous session's
decline, as investors took profit amid renewed concerns about
the strength of the global economic recovery.
                                
 Buoyed by a rise in global stock indices and a weak dollar,
oil prices rallied to a one-year high of $82 earlier last week.
                                
 But they wobbled and fell late in the week as weak earnings
results from the U.S. and a rise in U.S. jobless claims drove
investors to reconsider the pace of the economic recovery and
its impact on energy demand.
                                
 U.S. crude for December delivery fell 60 cents to $79.90 by
0123  GMT, after having earlier fallen as low as $79.57. The
contract settled down 69 cents a barrel at $80.50 on Friday,
squeezing out a weekly gain of 2.5 percent.
                                
 London Brent crude <LCOc1> fell 62 cents to $78.30.
                                
 "Asian speculators are cutting their positions after the
fall on Wall Street last week. But a rebound in the Dow Jones
futures this morning has helped limit the drop in oil prices,"
said Ryuichi Sato, an analyst at Mizuho Corporate Bank.
                                
 "But overall, the market is cautious about pushing oil
prices higher because the demand fundamentals are still weak
and the world economy is still fragile."
                                
 Comments from producer group OPEC last week that it would
raise output targets at a December meeting has also cast a pall
on the oil market, analysts said.
                                
 Stock bulls may hit the pause button again this week if a
wave of earnings due from marquee names such as Exxon Mobil and
a slew of economic data offer no new incentives to extend Wall
Street's seven-month rally. [ID:nN25475610]
                                
 Even though the profits that have come in so far have
proven to be surprisingly strong, U.S. stocks have made very
little headway, as investors search for more definitive signs
the economic recovery is gaining strength.
                                
 In a sign of growing uncertainty about the pace of the U.S.
recovery, the market volatility index <.VIX> was up 7.64
percent on Monday.
                                
 Risk aversion, coupled with speculation that U.S. interest
rates could be headed higher sooner than expected, saw the U.S.
dollar stretch some of its modest gains made late last week.
[USD/]
                                
 However, China was again the bright spot for the global
economic outlook, following comments by Vice Premier Li Keqiang
that the country's economic recovery has been consolidated
after having performed better than expected. [nBJC002368]
                                
 Separately, Iran said it has always adhered to its implied
output target under OPEC's existing output curbs and has not
violated its commitments, the semi-official Mehr news agency
reported on Saturday. [ID:nHAF431059]
                                
 Money managers hiked net long crude oil positions on the
New York Mercantile Exchange in the week to Oct. 20, the
Commodity Futures Trading Commission said in a report on
Friday. [ID:nN2399619]
                                
 Open interest positions remained bulked at the NYMEX
December crude oil $85 and $90 call options, according to
Reuters data on Friday, after crude futures prices moved above
$80 a barrel this week. [ID:nN23597167]
 (Reporting by Fayen Wong; Editing by Clarence Fernandez)