* Oil touched a 2-month low below $69 a barrel
* Crude pressured as dollar stays near highs
* Iraq to boost oil output after latest bidding round
By Osamu Tsukimori
TOKYO, Dec 14 (Reuters) - Oil fell around $1 to below $69 a
barrel on Monday, extending declines into a ninth day on
continued worries over high inventories and a stronger dollar.
Data showing higher-than-expected U.S. retail sales in
November pushed the dollar to a two-month high against the euro
on Friday, with support for the currency continuing on Monday
on speculation that the Federal Reserve could start tightening
policy sooner than previously expected. []
A stronger dollar prompts investors to sell off commodity
positions and tends to pressure crude prices.
Crude for January delivery <CLc1> was down 99 cents at
$68.88 a barrel by 0318 GMT, after falling as low as $68.59
earlier, the lowest since Oct. 5.
Crude, up some 55 percent so far this year, but still less
than half its July 2008 peak of more than $147 a barrel, has
fallen some 12 percent in the past nine sessions.
"Recently forex rates have had a large impact on the
market," said Tomokazu Amano, an analyst at Mitsubishi Corp
Futures & Securities in Tokyo. "As the Christmas and year-end
seasons approach, position adjustments to cut long positions
are also increasingly being seen."
Money managers cut their net long crude oil position on the
New York Mercantile Exchange in the week through Dec. 8 as oil
futures fell, the Commodity Futures Trading Commission said on
Friday. []
Traders said one item to watch this week is the U.S.
Federal Reserve's monetary policy decision, to be announced on
Wednesday.
The Federal Open Market Committee will likely try to find a
way to capture a somewhat brighter economic outlook in its
policy announcement, while maintaining its pledge to keep
borrowing costs at near record lows for an "extended period."
[]
Concerns about a sluggish recovery in global fuel demand,
along with high fuel stockpiles in the United States, have also
pressured crude prices.
In particular, stocks at Cushing, the delivery point for
NYMEX WTI crude futures, have swelled by 7.8 million barrels in
the last six weeks to 33.4 million barrels <USOICC=ECI>,
putting pressure on the front month and widening its discount
to the second month to over $2, from around 40 cents in October
and 60 cents in November. <CL-1=R>
However, oil storage capacity at Cushing has expanded by
5.2 million barrels this year, a Reuters survey shows, cutting
the risk that a shortage of tanks could cause oil prices to
plunge. []
Asian shares were mostly down on Monday. Japanese stocks
were down slightly on Monday, despite a Bank of Japan survey
showing Japanese business confidence edged up more than
expected in the three months to December. []
The market has largely factored in an outlook that the
Organization of the Petroleum Exporting Countries would hold
its output targets steady at its meeting on Dec. 22.
The recent drop in the price of oil will not affect OPEC's
inclination to keep its production target unchanged, Kuwait's
oil minister said on Sunday. []
Separately, Iraq, emerging from the shadows of war, expects
to boost its oil output to rival the level of top producer
Saudi Arabia after awarding some of its most attractive
oilfields to global energy companies. []
At the end of a two-day bidding round for 10 oil contracts
-- the second auction since the 2003 U.S. invasion -- Baghdad
had received pledges from oil firms to boost output by 4.765
million barrels per day, almost double Iraq's current output.
(Editing by Michael Urquhart)
