* Dollar index <.DXY> rises as euro <EUR=> falls
* 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 throughout, changes dateline, pvs SINGAPORE)
By Christopher Johnson
LONDON, March 4 (Reuters) - Oil slid towards $80 on Thursday
as the dollar strengthened, dragging fuel prices off seven-week
highs after news of another build in U.S. crude inventories.
The dollar gained around 0.25 percent against a basket of
currencies while the euro slipped before a European Central Bank
meeting at 1245 GMT, which was expected to keep interest rates
at a record low of 1.0 percent.
Benchmark U.S. crude oil futures <CLc1> for April fell 45
cents to $80.42 per barrel by 0904 GMT. The contract reached a
peak of $81.23 on Wednesday, its highest intraday point since
Jan. 12. London ICE Brent for April fell 40 cents to $78.85.
"A stronger dollar and a build in U.S. crude stocks are both
negative factors," said Carsten Fritsch, commodities analyst at
Commerzbank in Frankfurt. "We expect oil prices will come down
from these levels as fundamentals are not supportive."
The Energy Information Administration said on Wednesday U.S.
crude inventories last week rose by a larger-than-expected 4.1
million barrels, while gasoline stocks also increased.
Balancing that data were figures showing total U.S. oil
demand grew 0.3 percent in the past four weeks from a year
earlier, raising expectations for an end to a 1-1/2-year period
of sustained consumption decreases.
But currencies again led sentiment, analysts said, with the
focus on the euro zone and worries that a prolonged economic
slowdown would hit demand for energy.
"PRICES TOO HIGH"
The dollar fell 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.
Greece's budget-balancing pledges on Wednesday helped
restore 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. []
Oil prices have ranged between $69 and $84 a barrel over the
past few months at a time of uncertainty over the pace of
recovery. But a decline in crude stocks 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)
implies 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.
An interest rate decision by the Bank of England is also due
on Thursday, at 1200 GMT, followed by U.S. durable goods and
factory order statistics for January. On Friday, attention will
turn to U.S. non-farm payrolls.
(Additional reporting by Alejandro Barbajosa in Singapore;
editing by Sue Thomas)
