* Oil recovers from previous day's more than $2 fall
* Slack demand caps gains
* Awaits U.S. weekly oil data, Fed meeting, G20 summit
(Previous PERTH, updates throughout)
By Ikuko Kurahone
LONDON, Sept 22 (Reuters) - Oil rose above $70 a barrel on
Tuesday, supported by a weaker dollar and recovering from a
sharp fall the previous day, but bulging inventories and slow
demand limited gains.
U.S. crude futures <CLc1> rose 71 cents to $70.42 a barrel
by 0927 GMT, trimming the previous day's $2.33 drop.
London Brent crude <LCOc1> gained 68 cents to $69.37.
"This is a small rebound on the back of the dollar. Gold and
all commodities are tracking the pull-back of the dollar," said
Andrey Kryuchenkov, commodities analyst at VTB Capital in
London.
"But oil is not rising as much as other commodities. There
is still a demand concern capping oil prices."
The dollar fell against other currencies on Tuesday and hit
a one-year low against the euro. []
Its weakness makes dollar-denominated commodities cheaper
for investors holding currencies other than the dollar.
For much of this year, oil has been negatively correlated to
the dollar and has moved in tandem with stock markets, which
have recovered strongly from multi-year lows touched in March.
World stocks, measured by MSCI's global index
<.MIWD00000PUS>, rose by 0.8 percent on Tuesday. The index has
risen by 26 percent this year.
But many analysts are wary any economic recovery will be
much slower and more difficult than the equities markets are
implying and that fuel demand will continue to be depressed.
RANGE-BOUND
Oil prices have more than doubled from their December low of
just above $32 a barrel and struck a 2009 high of $75 a barrel
in August, but since the start of September they have been
trapped in a narrow range between about $68 and $72.
Global investors will watch for clues on the health of the
global economy from a U.S. Federal Reserve meeting starting late
on Tuesday and a summit of G20 nations later this week.
[]
Oil traders will also look at two sets of weekly oil data
from the United States, the world's top energy consumer, for
guidance on fundamentals of supply and demand.
Analysts in a Reuters poll forecast the data would show
increases in U.S. domestic oil product inventories, including
gasoline, diesel and heating oil, because of slack demand.
The figures were also expected to show a drop in crude oil
inventories following lower imports. []
Industry group American Petroleum Institute will release its
weekly oil data at 2030 GMT on Tuesday and the U.S. Energy
Information Administration, a government unit, will publish its
report on Wednesday.
Customs data from China, the second biggest energy consumer,
showed its gasoline exports jumped in August to their highest
since early 2007 and diesel exports remained steady.
Chinese domestic oil product demand has not kept up with
record high refinery operation rates, prompting oil companies to
exports fuels in large volumes. []
(Additional reporting by Fayen Wong in Perth; editing by Barbara
Lewis)
