* U.S. crude stocks fall, but products stocks rise
* Dollar bounces up broadly, weighs on oil
* Coming up: Weekly U.S. jobless claims Thursday
(Recasts, updates prices, market activity, changes byline and
moves dateline from previous LONDON)
By Selam Gebrekidan
NEW YORK, Aug 4 (Reuters) - U.S. crude oil retreated from a
three-month high on Wednesday in choppy trade as a rebounding
dollar and weak gasoline futures weighed on crude oil futures
after they were lifted by a government report of falling
inventories.
U.S. crude for September <CLc1> delivery fell 48 cents to
$82.07 a barrel at 2:03 p.m. EDT (1803 GMT), having traded from
$81.62 to $82.97, the highest front-month crude price since
$86.24 was struck on May 4.
Crude prices had climbed about 7.5 percent since Wednesday,
the last time prices finished lower.
Front-month ICE Brent crude <LCOc1> fell 64 cents to $82.04
a barrel.
The dollar rebounded from an eight-month low against the
yen on Wednesday and rose against the euro as encouraging U.S.
employment and service sector data prompted traders to unwind
bets against the U.S. currency. []
"It has been a tug of war with the markets today with
competing bullish and bearish (news). The dollar is back up and
it is putting downward pressure on crude prices," said Phil
Flynn, analyst at PFGBest Research in Chicago.
Oil had risen on a report from the U.S. Energy Information
Administration showed U.S. crude inventories fell by 2.8
million barrels to 358 million barrels in the week to July 30,
exceeding forecasts for a 1.4 million barrel drop. []
The drop in stockpiles came as imports fell by 1.52 million
barrels a day to 9.6 million bpd.
But gasoline stocks rose 729,000 barrels to 223 million,
against forecast for stocks to be down 400,000 barrels.
Distillate fuel stocks, which include diesel and heating
oil, rose 2.2 million barrels to 169.7 million, much more than
the forecast for a build of 1.2 million barrels.
Before the EIA report, oil and U.S. stocks were supported
by the Institute for Supply Management data showing the U.S.
service sector grew slightly more than expected in July.
[]
The ISM report followed similar upbeat data on euro zone
service sector that had helped lift global equities and a
report from private payrolls processor ADP that showed 42,000
private sector jobs were created in July, marginally beating
estimates. []
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For a graphic of oil's returning currency correlation:
http://link.reuters.com/hab43n ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
CAUTION ON IRAN
The market reacted cautiously to news of an attack on
Iranian President Mahmoud Ahmadinejad. []
[] Analysts said the market was wary of initial
reports.
"Prices haven't moved today but we've just had a very
strong rally," said Paul Harris, head of natural resources risk
management at Bank of Ireland. "Geopolitical risk from the
Middle East is broadly priced in."
In other news from the Middle East, Israel said it holds
Lebanon and Hamas responsible for separate attacks on its
territory this week and will continue to respond forcefully to
violence. []
(Additional reporting by Rebekah Kebede in New York, David
Turner and David Sheppard in London and Alejandro Barbajosa in
Singapore; Editing by David Gregorio)
