* U.S. March same-store sales up record 9.1 pct
* Revaluation of yuan seen boosting oil demand short term
* Coming Up: U.S. February wholesale inventories; 1400 GMT
(Adds dollar drop, updates prices)
By Alejandro Barbajosa
SINGAPORE, April 9 (Reuters) - Oil rebounded towards $86 on
Friday after two days of declines, as positive U.S. economic
indicators and views that China may revalue its currency
bolstered expectations for sustained energy demand growth.
The dollar weakened more than 0.2 percent against a basket
of currencies, raising the appeal of commodities and other
riskier assets to investors. On Thursday, strength in U.S.
retail sales boosted optimism about the economy and consumer
demand. []
The Chinese yuan and other Asian currencies rose briskly on
Thursday as speculation intensified that China might soon
revalue its currency and unveil a long-awaited shift in its
exchange-rate regime. []
"Oil is a dollar-denominated commodity, so if the dollar
gets weaker against the yuan, it will be cheaper for China to
buy oil," said Clarence Chu, an energy trader at Hudson Capital
Energy in Singapore. "In the short term, it could be bullish."
Front-month U.S. crude <CLc1> advanced 78 cents to $86.17 a
barrel by 0722 GMT, having touched an 18-month high of $87.09
earlier this week. ICE Brent <LCOc1> climbed 81 cents to
$85.62.
"The range is pretty tight," Chu said. "People are not
really jumping at the market at $87, but at the same time $85
support still holds. Technically speaking, the next resistance
level would be $90, but I don't think the market will really
rally above that level in terms of fundamentals."
TWO TOP CONSUMERS
U.S. oil consumption is gradually recovering from a year
and a half of decline. Over the past four weeks, total product
demand from the world's top user rose 1.9 percent from a year
earlier, the Energy Information Administration said on
Wednesday.
But U.S. crude inventories reached their highest level in
almost ten months after rising for ten consecutive weeks last
week, an indication that supply is still outpacing demand.
"If you look at the fundamentals, the market should pull
back," Chu said. "We lost so many jobs during the recession
that it takes a while for demand to really pick up."
The number of U.S. workers seeking jobless aid unexpectedly
shot up last week. However, that did not alter the view that
labour markets are recovering as the increase reflected Easter
holiday volatility. []
China, the world's second-largest oil consumer, has pegged
the yuan near 6.83 per dollar since mid-2008 to help its
exporters weather the global crisis. But this has drawn
increasing complaints from Washington that the yuan is
seriously undervalued, handing Chinese firms an unfair trading
advantage and effectively exporting unemployment.
The New York Times reported on Thursday that Beijing was
very close to announcing a "small but immediate" revaluation
and would then let the yuan fluctuate more widely.
"China is trying to boost domestic consumption, and
domestic consumption is growing," Chu said. "But China is still
an export-oriented country. In the longer-term, a revaluation
could be a bearish thing for oil."
(Editing by Ed Lane)
