* Gold rises to record on inflation worry, helps lift oil
* Nigeria unions want strike, militants threaten attacks
* Dollar strength amid euro dip limits oil gain
* Coming up: API oil inventory data, 4:30 p.m. EST Tuesday
(Recasts, updates with settlement prices and market
activity)
By Robert Gibbons
NEW YORK, Nov 8 (Reuters) - U.S. oil prices edged up on
Monday, posting a sixth straight rise to a two-year peak above
$87 a barrel as concerns about the inflationary effect of
monetary easing by the central bank kept gold and oil supported
despite a bounce by the dollar.
Trading was choppy and volume tepid as investors looked for
oil to consolidate last week's 6.6 percent surge as the dollar
slumped after the U.S. Federal Reserve said it would buy $600
billion of Treasuries by mid-2011 to stimulate the economy.
"(O)il has shown a propensity to decouple from an upside
reaction in the dollar during the past couple of sessions, a
bullish portent for the petroleum complex in our view," Jim
Ritterbusch, president at Ritterbusch & Associates in Galena,
Illinois, said in a research note.
"To some extent, the oil appears to have latched onto the
gold market as a better proxy for future inflation...."
U.S. crude for December delivery <CLc1> rose 21 cents to
settle at $87.06 a barrel, its highest settlement since the
$88.95 a barrel on Oct. 8.
Prices earlier reached $87.49, the highest price since
$89.82 was struck on Oct. 9, 2008, then fell and bounced off
Friday's $85.96 low.
ICE December Brent crude <LCOc1> rose 35 cents to settle
at $88.46 a barrel.
Gold powered to a record high above $1,400 an ounce,
extending its record breaking rally a third day as safe-haven
buying prompted by renewed Irish budget problems offset the
dollar's bounce. []
"This looks like consolidation, with crude bouncing after
holding Friday's low. The headlines on Nigeria were out there
earlier, and were supportive, and the dollar was not as strong
as earlier," said Phil Flynn, analyst at PFGBest Research in
Chicago.
Nigeria's main militant group threatened on Monday to
launch a series of attacks on oil infrastructure and said it
was holding several foreign hostages. []
The militants did not immediately claim responsibility when
Afren <AFRE.L> said gunmen attacked an offshore oil rig the
company operated, kidnapping five crew members including
foreigners and injuring two others. []
The euro fell a second consecutive session amid budget
problems in Ireland and euro zone debt issues. Last week's
better-than-expected U.S. jobs data also prompted dollar
purchases, boosting the dollar index <.DXY> measuring the
greenback against a basket of currencies. []
The dollar's recent slide has concerned producers as the
value of greenbacks received for dollar-denominated oil
diminished.
A stronger dollar can pressure oil prices by improving the
value of dollar's paid producers and by sending investment to
other markets chasing better returns.
Libya's top oil official and a delegate from one of OPEC's
Gulf members said they saw no need for OPEC to boost output
targets at its December meeting. []
"While the price is inching up, we think the terms of trade
are going against OPEC countries and the increase in the price
did not even compensate for the loss in the dollar value and
the increase in the price of commodities," said Shokri Ghanem,
chairman of Libya's National Oil Corporation.
Qatari Oil Minister Abdullah al-Attiyah said the oil market
was stable and that countries would have to live with higher
prices. []
Last week he said that $70 to $90 per barrel was very
reasonable for consumers and producers, echoing a similar
comment about that price range from Saudi Oil Minister Ali
al-Naimi. []
(Additional reporting by Gene Ramos in New York, Rebekah
Kebede in Perth and Zaida Espana in London; Editing by
Marguerita Choy)
