* Geopolitical risks also lend support
* Traders caution prices look vulnerable
(Updates prices, adds detail)
By David Sheppard
LONDON, Aug 9 (Reuters) - Oil rose above $81 a barrel on
Monday, adding to last week's two percent rise fuelled by a weak
dollar and geopolitical tensions in the Middle East.
Analysts said the dollar, which is slipping towards a
15-year low against the yen and hit a three-month low against
the euro on Friday, was overshadowing concerns about the slow
pace of recovery in the United States.
U.S. crude for September delivery <CLc1> rose 74 cents to
$81.44 a barrel by 1414 GMT, having earlier hit a high of $81.76
before easing slightly.
The contract fell $1.31 or 1.6 percent to settle at $80.70 a
barrel on Friday, but ended the week 2.2 percent higher.
London Brent crude <LCOc1> gained 61 cents to $80.76.
Prices closed above $80 a barrel last week for the first
time since May, but some traders have cautioned they think
prices will struggle to stay at this level.
"There has been some optimism about the strength of Chinese
demand but that has faded now," Bache Commodities broker
Christopher Bellew said.
"I'm not certain the price will be sustained for very long
until we see much more convincing signs of economic recovery."
The latest U.S. employment figures on Friday showed the
world's largest economy shed 131,000 jobs in July, more than
double the drop forecast by the market. []
But some analysts said the weak U.S. economy was providing a
short-term fillip for prices as it is also depressing the value
of the dollar, making dollar-priced commodities cheaper for
holders of other currencies.
RISING TENSIONS
Geopolitical tensions between the West and Iran could
provide some of the impetus for a move higher, analysts said.
Iran showed off four new domestically made small submarines
on Sunday that it said would bolster its defence capability as
it vows to confront any military threat from countries opposed
to its nuclear programme. []
Japan may consider cutting crude oil imports from Iran as
pressure builds from the United States to impose sanctions on
the Islamic Republic over its nuclear programme, an official
told Reuters on Monday.
Investors will watch China's trade and industrial output
data due mid-week to gauge how its economy is faring, with the
Ministry of Commerce having warned that the second half of the
year would be a "grim" period for its exporters.
Rising Chinese oil demand has been one of the main factors
pushing prices higher, analysts said, but there are concerns its
rate of economic growth could slow.
In a sign that many investors remain bullish on oil prices,
open interest positions remained heavy at the September $85, $90
and $95 call options on Friday, while money managers also
increased net long crude oil positions on the New York
Mercantile Exchange in the week through Aug. 3. []
[]
(Additional reporting by Fayen Wong in Perth and Osamu
Tskukimori in Tokyo; editing by James Jukwey)
