* Investors sell commodities and equities as dollar firms
* Nigerian rebels reinstate cease-fire in Niger Delta
* Caterpillar permanently cuts 2,500 jobs
(Recasts, updates prices throughout, changes dateline from
previous LONDON, adds byline)
By Joshua Schneyer
NEW YORK, Oct 26 (Reuters) - Oil fell more than 2 percent
to below $79 a barrel on Monday on concerns that a sluggish
economic recovery will keep fuel demand low.
Investors scaled back their commodities holdings following
a recent rally for raw goods. Equities fell and the U.S. dollar
firmed against other currencies, after touching a 14-month low
earlier on Monday. []
"There is selling spread out among a broad array of
commodities," said analyst Brad Samples of Summit Energy in
Louisville, Kentucky.
"The dollar is now up, after earlier being down, and that
is helping to point crude oil lower," he added.
U.S. crude <CLc1> for December delivery fell $1.65 to
$78.85 per barrel by 1640 GMT, having earlier risen to as high
as $81.58, near a one-year high of $82 a barrel reached on Oct.
21. Brent crude <LCOc1> fell $1.57 to $77.35.
A stronger dollar makes oil costly for holders of other
currencies. The dollar firmed as investors moved into more
safe-haven assets like U.S. Treasury bonds, and away from
commodities.
Caterpillar <CAT.N> announced plans to permanently cut
2,500 jobs, after a sluggish economy curbed demand for its
tractors and industrial equipment. []
U.S. stock indices slid more than 1 percent as investors
questioned whether third quarter corporate earnings were high
enough to justify a recent rally in equities. <.SPX> <>
"The oil market is still focused on how the dollar and the
stock markets are moving," said Phil Flynn, analyst at PFGBest
Research in Chicago.
Nigeria's main militant group reinstated a cease-fire on
Sunday in the oil-producing Niger Delta to allow for peace
talks. That could free up more oil exports from the
conflict-torn region whose output has been curtailed this year.
[]
Warm weather may translate to less heating oil demand in
the United States, the largest consumer. U.S. total heating
demand will be nearly 23 percent lower than normal this week as
temperatures average near to above normal in the Northeast and
the Midwest, the National Weather Service projected on Monday.
[]
Oil fell in spite of some bullish data. U.S. crude oil was
expected to average $74.00 a barrel in 2010, a Reuters poll
showed on Monday, as almost one third of analysts surveyed
increased their forecasts on the back of a stronger economic
outlook.[]
For a graphic showing the Reuters oil price poll, click
here: http://graphics.thomsonreuters.com/109/CMD_OILPL1009.gif
Goldman Sachs said a nearly 10 percent jump in oil prices
over the last two weeks was due to a rebound in diesel demand,
and backed a view prices will hit $85 a barrel before 2009 is
out.
(Additional reporting by Alex Lawler, Fayen Wong and Gene
Ramos; Editing by Marguerita Choy)
