* IEA shows global fuel demand to grow in Q4
* Weekly U.S. EIA data due at 1600 GMT
* Dollar steady near 15-month lows
(Changes dateline to London, recasts)
By Emma Farge
LONDON, Nov 12 (Reuters) - Oil dipped below $79 a barrel on
Thursday as an expected hike in U.S. crude stocks outweighed
both a weak dollar near 15-month lows and an IEA report that
said global oil demand will return to growth this quarter.
Delayed weekly inventories data out of the world's largest
fuel consumer the United States are set to show a 700,000 barrel
rise in crude stocks, a Reuters survey shows. []
This will follow a bigger-than-expected increase of 1.2
million barrels from the American Petroleum Institute. []
U.S. crude futures fell 48 cents to $78.80 a barrel by 0956
GMT, in a week where prices have peeped above the
psychologically key $80 a barrel every day.
Brent crude futures <LCOc1> fell 39 cents to $77.56 a
barrel.
The price dip came despite a report from the International
Energy Agency showing that global oil demand will grow in the
fourth quarter for the first time in over a year. []
Next year oil demand is expected to average 86.2 million
barrels per day, following stronger-than-expected preliminary
data in North America and buoyant demand in non-OECD Asia and
the Middle East, the IEA said.
The monthly report follows surveys from OPEC and U.S.
government agency the Energy Information Administration that
lifted oil demand growth forecasts for 2010. []
[]
But analysts said that traders have already factored in the
more positive demand picture and that this expectation helped
crude rally above $80 a barrel in recent weeks.
"Most market participants have already played the game based
on a pretty strong demand recovery and it's not that
surprising," said Andy Sommer, senior oil analyst with EGL
Group.
He added that even in an environment of more robust fuel
demand, it will still take a long time to clear swollen stocks
of oil and oil products stored at land and on floating vessels.
"The overall inventories picture is still bearish," he said.
Ship brokers estimated product volumes, mostly heating oil,
are above 90 million barrels and higher than the world's daily
oil consumption. []
Also on the supply front, oil companies were quickly
restoring Gulf of Mexico production shut by Tropical Storm Ida,
the U.S. Minerals Management Service said on Wednesday.
[]
Analysts said that weakness in the dollar, near 15-month
lows against a basket of currencies, waslikely to curb oil
losses going forward. []
Oil and the dollar tend to be inversely correlated because a
weak dollar makes the commodity relatively cheap to non-dollar
buyers.
The expectation that U.S. interest rates will remain near
zero for the foreseeable future also increased the appeal of
higher-yielding assets such as oil.
"The dollar will remain a very important factor as there is
a natural link between the two markets," said Sommer.
(Additional reporting by Felicia Loo in Singapore; Editing
by William Hardy)
