* Oil bounces on soft dollar after touching three-week low
* Trading light, U.S. shut early for public holiday
* Warmer northern hemisphere winter, demand concerns weigh
(Updates ending prices)
By Christopher Johnson
LONDON, Jan 18 (Reuters) - Oil rallied above $78 per barrel
on Monday, snapping a five-day losing streak, as the dollar
eased against a basket of currencies, but concern over the
outlook for energy demand and economic recovery weighed on the
market.
Oil prices began last week above $80, supported by colder
winter weather in the northern hemisphere and an influx of
fresh capital from money managers and funds seeking to allocate
more cash to commodities this year.
But poor company and banking results, including a mixed
quarterly scorecard from JPMorgan Chase & Co <JPM.N> on Friday,
concerns about prospects for the global economy and oil demand
as well as rising temperatures in Europe and the United States
had pulled prices lower for five consecutive working days.
U.S. crude for February delivery <CLc1> rose 25 cents to
$78.25 a barrel by the end of the shortened electronic trading
session in New York, where the NYMEX floor was shut for the
U.S. Martin Luther King holiday. Because of the holiday, the
NYMEX will not print an official settlement price until
Tuesday.
London Brent crude <LCOc1> rose 16 cents to $77.27.
With volume relatively light, traders cautioned that the
move upward could be short-lived after U.S. prices bounced from
a three-week intraday low of $77.07 a barrel.
Christopher Bellew, a broker at Bache Commodities in
London, said many investors were worried about the state of oil
demand.
"Funds are holding sizable positions, the weather is
warming in the northern hemisphere and there are concerns that
there is ample supply and a fragile outlook for demand," Bellew
said. "Momentum is the key to this market, and it has gained
downward momentum."
Eugen Weinberg, head of commodities analysis at Commerzbank
in Frankfurt, agreed: "Market sentiment seems to have turned
after prices failed to stay above $80 per barrel."
DEMAND
The dollar index, a gauge of the greenback's performance
against six other currencies, slipped to 77.115 by 1949 GMT,
down from Friday's U.S. close of 77.323 <.DXY>. []
The prices of oil and other commodities often move
inversely to the dollar because they are traded on
international markets in the U.S. currency.
Crude oil prices have fallen steadily since striking a
15-month intraday high of $83.95 a barrel on Jan. 11, dragged
down by weak U.S. economic data and fears of a sluggish rebound
in demand in the world's largest energy consumer.
Oil is now almost 50 percent below its lifetime high of
more than $147 a barrel hit in July 2008.
The International Energy Agency (IEA) said on Monday the
end of huge economic stimulus packages around the globe
threatened a modest recovery in global oil demand this year.
For details, []
IEA Deputy Executive Director Richard Jones told Reuters in
an interview the oil market was "pretty well supplied" so OPEC
was unlikely to change output at its March meeting.
"That is something we are watching closely," he said. "We
think these are downward risks to demand."
Traders say a raft of Chinese data this week, including
fourth-quarter gross domestic product, retail sales and
industrial production for December, could lift crude prices.
<ECONCN>
Investors will also watch U.S. earnings from International
Business Machines Corp <IBM.N> and Goldman Sachs Group Inc
<GS.N> due to report this week. []
(Additional reporting by Fayen Wong in Perth; editing by Sue
Thomas and Jeffrey Benkoe)
