* Oil weakens after overnight surge as dollar recovers
* Weak U.S. housing indicators weigh on sentiment
* US crude build counters gasoline draw, driving season
nears
(Updates prices)
By Seng Li Peng
SINGAPORE, Feb 25 (Reuters) - Oil fell below $80 on
Thursday, as the dollar recovered and the euro slid on concerns
over the European economy, while the surprise rise in U.S.
crude stocks offset the fall on gasoline ahead of the driving
season.
The euro fell to a one-year low against the yen and was
down versus the dollar on nagging fears over Greece's fiscal
woes, while the dollar's trade-weighted index rebounded. []
U.S. crude for April delivery <CLc1> fell 56 cents to
$79.44 a barrel at 0808 GMT, after rising by $1 on Wednesday,
lifted by comments from U.S. Federal Reserve Chairman Ben
Bernanke, who reaffirmed his commitment to keeping interest
rates low.
London Brent crude <LCOc1> lost 50 cents to $77.59 a
barrel.
"The stronger dollar against the euro is a key factor. People
are concerned about issues surrounding Greece, Spain and
Portugal," said Tetsu Emori, general manager at Tokyo-based
Astmax Co.
The firmer dollar makes oil and other commodities more
expensive for holders of other currencies, and also dragged
gold down to near a two-week low.
"People are also concerned over bearish factors such as the
U.S. housing indicators. The market will be looking more at
these negative factors than bullish factors, which is the
turning point," Emori added.
Sales of new U.S. homes unexpectedly fell to a record low
in January, while demand for loans to buy homes hit a 13-year
low last week, fanning fears of renewed weakness in the housing
market and raising doubts over the pace of the economic
recovery. []
In Europe, Portugal's Socialist government, under investor
pressure to cut spending and ensure it will not be the next
weak link in the euro zone after Greece, has frozen civil
service salaries this year as part of its plan to reduce its
ballooning fiscal gap. []
These countered the initial uptrend, after Bernanke said on
Wednesday interest rates will stay low in view of a weak job
market and low inflation.
Bernanke's testimony on Wednesday to Congress had earlier
calmed investors' concerns over interest rate after the Fed
said last week that discount rates will be raised to 0.75
percent from 0.5 percent, triggering an immediate rise in the
dollar.
U.S. CRUDE STOCKS UP VS GASOLINE DRAW
U.S. crude oil stockpiles rose by 3 million barrels to
337.5 million barrels in week ended Feb. 19 week, data from the
Energy Information Agency show, countering industry group
American Petroleum Institute's (API) figures on Tuesday showing
a large crude inventory fall. [].
But U.S. gasoline inventories fell 900,000 barrels to 231.2
million barrels, versus analysts estimates of a 400,000-barrel
build. []
"The build is a result related to summer drive time. There
are expectations that (gasoline) supplies won't be enough,"
said Jonathan Barratt, managing director of Commodity Broking
Services.
U.S. refiners normally start stockpiling in April for the
start of the driving season in end-May and peaks in June-July.
China continued to show healthy demand for oil, importing
17.1 million tonnes of crude in January, up nearly 33.4 percent
from a year ago, official data showed.
"The market appears to be U.S.-centric... but one hard
evidence is the demand we are getting from China, where it has
continued to grow," said Barratt.
(Editing by Ramthan Hussain) ((lipeng.seng@thomsonreuters.com;
+65 6870 3086; Reuters Messaging:
lipeng.seng.reuters.com@reuters.net)) ((If you have a query or
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