* Dollar strength offsets higher European equities
* Oil stuck in $75-$85 a barrel range
(Updates throughout, changes dateline from PERTH)
By Joe Brock
LONDON, Nov 20 (Reuters) - Oil edged lower towards $77 a
barrel on Friday, extending a 2 percent drop in the previous
session and pressured by a stronger U.S. dollar.
As the dollar rises it makes commodities like oil priced in
the greenback more expensive for those holding alternative
currencies.
U.S. crude for December delivery fell 39 cents to $77.07 a
barrel by 1000 GMT. London Brent crude slipped 27 cents to
$77.37.
"Oil prices are consolidating after strong gains early this
week and fall yesterday. The dollar, risk appetite and equity
movements are the main drivers for oil at the moment," said
Carsten Fritsch, oil analyst at Commerzbank in Frankfurt.
For the last month oil prices have traded mainly between $75
and $80 a barrel as mixed signals over economic recovery failed
to give a clear picture of the outlook for energy demand.
"I think we need to see a sustained shift in market
sentiment, not just one day to the next, then we could go below
$75 and weak fundamentals will be of more importance," Fritsch
added.
A lack of demand for oil products has led to very high
inventory levels being stored at sea as well as on land. Volumes
in floating storage are estimated to be around 90 million
barrels, more than total global daily oil consumption.
[]
Analysts say products being bought for floating storage,
often a financial strategy where the buyer is able to sell the
products on for a profit at a later date, has created the
illusion of improved demand.
"By the end of the winter there is likely to be as much
distillates afloat as in the total U.S. at the end of winter
2007 and we expect that it will be more and more difficult for
some of the Wall Street commodity banks to avoid mentioning the
subject and to continue to hide the floating storage fill-up as
'demand from emerging economies'," said Olivier Jakob, oil
analyst at Petromatrix in a research note on Friday.
DOLLAR SWINGS
Asian stock markets slipped on Friday, following a drop on
Wall Street, but European shares have started the day strongly,
limiting oil's losses. []
Crude prices have swung with the dollar this week, jumping
over $3 on Monday and then shedding over $2 on Thursday as the
U.S. currency firmed against a basket of currencies.
The dollar has been shifting in response to changing
perceptions of the U.S. economy.
The latest data came from the Conference Board's index of
U.S. leading economic indicators <USLEAD=ECI> -- a gauge of the
U.S. economy's prospects -- rose to its highest since September
2007, but fell short of Wall Street's expectations.
Fresh data showing a record one in seven U.S. mortgages were
in foreclosure or at least one payment was past due in the third
quarter also added to investors' worry that the housing market's
recovery will be tepid at best. []
Asia is leading the global economy out of the deepest
downturn in decades but the recovery will be marred by high
unemployment and huge government debt across the industrialised
countries, the OECD said on Thursday. []
Many analysts have cautioned that the high jobless rate in
the United States and Europe will keep global petroleum demand
at anaemic levels for some time to come.
"While the past few months have seen a gradual turnaround in
global oil demand data and oil demand expectations, there are
still significant areas of weakness and dislocations," Barclays
Capital said in a report.
(Editing by James Jukwey)
