* API data shows surprise build in U.S. crude stockpile
* Dollar strikes 1-year low vs euro on recovery hopes
* Saudi Arabia: demand for crude rising on improved economy
(Recasts, updates prices, dollar movements)
By Fayen Wong
PERTH, Sept 23 (Reuters) - Oil steadied at below $72 a
barrel on Wednesday, after rising more than 2 percent in the
previous session, as a bearish industry report showing a
surprise build in U.S. crude oil stockpiles was offset by
further weakness in the dollar.
U.S. crude <CLc1> for November delivery slipped 11 cents to
$71.63 a barrel by 0556 GMT, after having fallen as much as 63
cents earlier. The October contract, which expired on Tuesday,
rose $1.84 to settle at $71.55 a barrel.
London Brent crude <LCOc1> dipped 31 cents to $70.22.
"The API report is bearish and it's showing that energy
demand in the U.S. is still very weak," said Benson Wang, a
trader at Commodity Broking Services in Sydney.
"The dollar is offering some support but it'd be worrying
for the U.S. economy and its inflation rate if the dollar falls
much further."
The ailing dollar fell to a one-year low against a basket
of currencies on Wednesday, with the dollar index <.DXY>
falling 0.29 percent to 75.927 points, as speculators dumped
the low-yielding greenback ahead of a Federal Reserve policy
announcement later in the day. []
While the Federal Reserve Bank is widely expected to hold
interest rates steady, markets will be watching for comments
later on Wednesday that indicate the Fed might wind back its
super-accommodative policy stance in view of improving economic
data, which would boost the dollar, analysts said.
Although a weak dollar is typically good news for
commodities prices, a bearish inventory report from the
American Petroleum Institute (API) has muted investors'
optimism.
The API report, seen as a precursor to more authoritative
data from the U.S. Energy Information Administration due later
on Wednesday, showed crude stocks rose 276,000 barrels in the
week to Sept. 18, against a Reuters poll forecast for a
drawdown of 1.5 million barrels. [] []
The increase in crude inventories was driven by higher
imports, that rose 219,000 barrels per day (bpd) as well as
slower refinery runs, which dipped 92,000 bpd, the API said in
its weekly report. []
Separately, OPEC kingpin Saudi Arabia told Reuters in an
interview on Tuesday that demand for Saudi crude was
increasing, and that was reflective of the world's economy
recovering from its worst recession since the Great Depression.
[]
Saudi Arabia's oil minister Ali al-Naimi also said that
OPEC would not need to cut output next year, based on latest
figures on supply and demand.
(Reporting by Fayen Wong; Editing by Clarence Fernandez)
