* U.S. crude inventories gain despite increasing demand
* Oil likely to rise to $80-$90 range, Barclays says
* Coming up: ECB rate decision at 1245 GMT
(Updates prices)
By Alejandro Barbajosa
SINGAPORE, March 4 (Reuters) - Oil slid towards $80 on
Thursday as the dollar strengthened, pushing the fuel off
seven-week highs struck a day earlier as U.S. demand edged up
in a recovering economy.
The dollar gained close to 0.3 percent against a basket of
currencies, sending crude down 50 cents to $80.37 a barrel by
0747 GMT. The front-month contract touched $81.23 on Wednesday,
its highest intraday price since Jan. 12. London ICE Brent for
April fell 40 cents to $78.85.
"The oil market will trade in a range of $75 to $85 at
least for the next two months, and it will possibly go above
$85 by the middle of this year, depending on economic
recovery," said Ken Hasegawa, a commodity derivatives manager
at brokerage Newedge in Japan.
Total U.S. oil demand grew 0.3 percent in the past four
weeks from a year earlier, U.S. government data showed on
Wednesday, raising expectations for an end to a 1-1/2-year
period of sustained consumption decreases.
Greece's budget-balancing pledges on Wednesday helped
restore some appetite for risk, boosting the euro against the
dollar. On Thursday, the spotlight shines again on the euro
zone when it reports revised gross domestic product for the
fourth quarter.
China Investment Corp, the country's sovereign wealth fund,
believes commodity prices are outpacing the global economic
recovery, fuelled by loose monetary policies, a top official
said on Thursday.
"Personally, I think the prices are a bit too high,
relative to the strength of real economic recovery," Jesse
Wang, CIC executive vice president and chief risk officer, said
on the sidelines of a conference in Beijing. []
DEMAND VS INVENTORIES
Prices have ranged $69 to $84 a barrel over the past few
months amid uncertainty about the pace of economic recovery.
But a decline in global crude inventories and the surplus held
in floating storage has set the stage for an increase towards
the $80-$90 range, according to Barclays Capital.
The latest data from the Joint Oil Data Initiative (JODI)
implied that Asian demand has been growing by more than 2
million barrels per day from a year earlier, according to
Barclays.
"If Asian demand can grow at such rapid rates when prices
are in the $70 to $80 range, then prices cannot stay in that
range for much longer," Barclays analysts headed by Paul
Horsnell said.
Interest rate decisions from the Bank of England and the
European Central Bank are also expected on Thursday, followed
by U.S. durable goods and factory order statistics for January.
And on Friday, attention will turn to U.S. non-farm payrolls.
Some doubts remained about the pace of economic recovery.
Newedge's Hasegawa said it is still "slow", adding that any oil
price gains could accelerate with "short-covering" when prices
reach $81.50 and $82.
U.S. crude inventories last week rose a
larger-than-expected 4.1 million barrels, the Energy
Information Administration (EIA) said on Wednesday.
The dollar had fallen against the euro on Wednesday as
concerns eased about deficits in European countries. A weaker
dollar tends to support oil prices, making dollar-denominated
commodities cheaper for other currency holders.
(Additional reporting by Samuel Shen and Doug Young in
Beijing; Editing by Clarence Fernandez)
