* Stronger dollar weighs on crude prices
* Some analysts see oil testing 2010 high near $84
* Coming up: U.S. inventory data from API due out Tuesday
(Recasts, updates throughout, previous dateline LONDON)
By Rebekah Kebede
NEW YORK, March 8 (Reuters) - Oil slipped toward $81 a
barrel on Monday, pressured as the U.S. dollar index rose,
reversing earlier losses against a basket of currencies.
Crude oil futures reached an eight-week high above $82 a
barrel earlier, buoyed by the weaker dollar and optimism about
the economic outlook.
U.S. crude <CLc1> fell 18 cents to $81.32 a barrel by 12:21
p.m. EST (1721 GMT), after touching $82.41, the highest since
$83.95 on Jan. 11.
Brent crude <LCOc1> rose 8 cents to $79.97 after hitting
$80.92, also the highest since Jan. 11.
"The market continues to demonstrate its attachment to the
financials. Since the dollar seemed to have slowly rebounded,
we basically couldn't hold $82 (a barrel) and now it looks as
if the market is approaching the $81 level," Gene McGillian,
analyst, at Tradition Energy in Stamford, Connecticut.
The dollar index <.DXY> rose slightly on Monday, reversing
earlier losses. A stronger dollar makes dollar-denominated
commodities more expensive for holders of other currencies.
Positive economic data such as a report on Friday showing
that U.S. employers cut fewer jobs than expected in February
have helped oil rally in the last several weeks, but some
market watchers were cautious.
"People are doing back flips over the jobs numbers. They
were nice but we're still losing jobs so I'm a bit cautious on
my euphoria," said Dan Flynn, analyst at PFGBest Research in
Chicago.
On Monday, another report showed that the U.S. job market
continued to improve in February for the sixth consecutive
month. []
Flynn also noted China's concern about banks and expected
crude futures to run into resistance around $83 a barrel.
Bank lending to special purpose finance vehicles set up by
Chinese local governments may pose a future risk, deputy
central bank governor Su Ning said on Monday. []
2010 HIGH
Earlier Monday, oil prices climbed over $82 to an
eight-week high, just shy of reaching the 2010 high near $84 a
barrel.
"The rally still looks pretty good even with our pullback
to midday lows ... Right now, it does look like the market is
trying to hold above $80 and move higher," McGillian said.
Money managers extended their net long crude oil futures
positions on the New York Mercantile Exchange in the week to
March 2, the Commodity Futures Trading Commission said on
Friday. []
Also supportive was news that China will build two
strategic oil reserve bases -- a development likely to underpin
demand in the world's second-largest consumer. []
With global demand expected to revive in 2010, the
Organization of the Petroleum Exporting Countries looks set to
keep its production target unchanged when it meets on March 17,
as it has for more than a year. []
(Additional reporting by Robert Gibbons and Gene Ramos in New
York, Alex Lawler in London, Osamu Tsukimori in Tokyo; Editing
by Lisa Shumaker)
