* Oil edging toward below $77 due to stronger dollar
* Fall in commodities, gold also hurt oil sentiment
* Demand for oil to stay strong, but prices unlikely to
jump
By Seng Li Peng
SINGAPORE, Feb 18 (Reuters) - Oil fell towards $77 a barrel
on Thursday, dragged by the stronger dollar and weaker gold
prices, which also dampened other commodities, outweighing
upbeat news on the U.S. economy.
The dollar rose to near nine-month highs on the euro,
which was hounded by sovereign debt woes and weak growth
outlook, in contrast to news that Federal Reserve policy
makers, confident in the U.S. recovery, aim to begin selling
securities soon. []
U.S. crude for March delivery <CLc1> fell 30 cents to
$77.03 a barrel at 0358 GMT. London Brent crude for April
<LCOc1> lost 31 cents to $75.96 a barrel.
"The U.S. dollar has rebounded, as it was pretty much
oversold previously," said Peter McGuire, managing director of
Commodity Warrants Australia in Sydney.
"All the commodities went up on Tuesday evening, but a lot
of them took a nosedive."
The dollar index <.DXY> rose 0.2 percent against a basket
of currencies to near seven-month highs, making oil and other
commodities more expensive for holders of other currencies.
The Australian dollar was under pressure on plans by the
International Monetary Fund to sell more of its gold holdings,
which sent the precious metal down 0.4 percent to $1,101.50 an
ounce. Gold had peaked at $1,126.85 <XAU=> on Wednesday, the
highest since Jan. 20. []. []
"Gold was off nearly $20 from a high, and that probably
floated a little across to the crude market," said McGuire.
He added that crude prices will be rangebound around the
$70 level in the short term.
But other analysts are more optimistic, saying that demand
for crude is expected to stay strong due to the recovery
underway in Asia and the United States.
"The demand profile remains robust, with growth outpacing
supply-side additions," Barclays Capital said in a report.
"With even the middle of the barrel likely to show some
relative improvement in the second quarter, the likely price
momentum remains skewed to the upside, in our view."
Barcap added that the trading range should start to move
up, with $80 per barrel transitioning from being an effective
ceiling to becoming an effective floor.
"The level of floating crude inventories not in transit
continues to fall and should become insignificant over the next
couple of months," it added.
But in the short-haul, oil prices may not see any major
upward movement as distillates stocks held on tankers remained
a worry despite the recent falls, other traders said.
U.S. crude inventories edged down unexpectedly by 63,000
barrels last week -- versus forecasts for a 2.2. million-barrel
rise -- as refineries increased activity, data from industry
group American Petroleum Institute showed. [].
Gasoline inventories rose 1.4 million barrels, while
distillates -- which include heating oil and diesel -- rose 1.3
million barrels. (EIA/S]
The U.S. Energy Information Administration's oil inventory
report will be published on Thursday at 1600 GMT.
(Editing by Ramthan Hussain)
