* German Ifo sentiment up in Oct, helps lift oil
* G20 fin mins meeting on currencies eyed
* Coming Up: CFTC trader position data, 3:30 p.m. EDT Fri
(Recasts, updates prices, market activity, changes byline and
moves dateline from previous LONDON)
By Robert Gibbons
NEW YORK, Oct 22 (Reuters) - Oil prices edged higher in
choppy trading on Friday, supported by positive German business
sentiment data as the dollar index seesawed ahead of a G20
finance ministers' decision on currencies.
Investors were eyeing a Group of 20 meeting in South Korea
that looked unlikely to reach a deal on a U.S.-led initiative
for a commitment from emerging countries to allow their
currencies to rise. []
Failure to reach a deal on currencies in South Korea could
weigh further on the dollar, analysts said.
Oil received a lift early from news German business
sentiment in October reached its strongest in 3-1/2 years,
according to the Munich-based Ifo think tank's business climate
index, which indicates growth levels six months ahead.
[]
U.S. crude for December <CLc1> delivery rose 40 cents, or
0.5 percent, to $80.96 per barrel by 12:07 p.m. EDT (1607
GMT).
In London, ICE Brent December crude <LCOc1> rose 43 cents,
or 0.53 percent, to $82.26 a barrel.
Oil futures slumped on Thursday when the dollar's recovery
from an early dip sparked a sell-off as doubts resurfaced about
the extent of potential U.S. monetary easing. Data showing
slower third-quarter economic growth in China also weighed on
oil prices.
"Participants are waiting to see how much money the Fed is
going to run off, hoping that it will give a directional cue
for the dollar and subsequently oil," Mike Fitzpatrick, vice
president at MF Global in New York, said in a note.
Analysts expect U.S. Federal Reserve to take up the
question of another round of government debt purchases, or
quantitative easing, at its policy meeting on Nov. 2-3.
"The developing currency war and the devaluation war is the
single most important factor for the oil market besides maybe
the rate of Chinese economic growth," said Eugen Weinberg,
commodities analyst at Commerzbank, adding, "the negative
correlation is sustainable in the longer term."
The U.S. dollar index <.DXY> was volatile on Friday. An
early turn negative helped send U.S. crude futures up over $1
intraday as the greenback's weakness prodded investors into
commodities as an alternative to holding cash.
But the index was higher at midday Friday in New York and
only slightly stronger versus the euro <EUR=>, also amid choppy
trading.
The dollar index was down around 7 percent intraday from
September highs and the greenback's weakness fuels interest in
oil and other commodities among investors looking for better
returns and from holders of cash.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic on crude oil and gold correlation with the euro:
http://link.reuters.com/cuw79p
Graphic showing oil's technical outlook:
http://link.reuters.com/duw79p
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While currency disputes helped keep markets on edge, the
battle in France over pension changes also supported oil
futures.
Refinery outages and tanker disruptions in France continued
with unions signaling their determination to keep fighting even
if President Nicolas Sarkozy's unpopular pension reform becomes
law on Friday. []
STORM THREAT EYED
Sources had mixed views about whether oil was being
supported by a threat from Tropical Storm Richard in the
Caribbean Sea. The storm was expected to strengthen into a
hurricane this weekend and hit Mexico's Yucatan Peninsula on
Monday.
After crossing the Yucatan, the remnants of Richard could
emerge in Mexico's oil-rich Bay of Campeche and possibly
threaten U.S. oil and natural gas production facilities in the
northern Gulf of Mexico, the U.S. National Hurricane Center and
and some computer weather models forecast. []
At 3:30 p.m. EDT (1930 GMT) on Friday, investors will
receive an update from the Commodity Futures Trading Commission
on positions held on the New York Mercantile Exchange by money
managers as of last Tuesday.
(Additional reporting by Gene Ramos in New York, Emma Farge in
London and Alejandro Barbajosa in Singapore; Editing by David
Gregorio)
