* Oil touched $86.90 on Monday after U.S. economic reports
* Prices post steepest rally of 2010 on recovery optimism
* Coming Up: U.S. oil inventory reports from API and EIA
(Updates prices, adds comment)
By Chris Baldwin
LONDON, April 6 (Reuters) - Oil retreated from 18-month
highs on Tuesday after rallying for five sessions in a row, as
the dollar's rise following strong U.S. economic data weighed on
a number of key commodities.
U.S. crude for May delivery <CLc1> fell 29 cents by 0957
GMT, off Monday's intraday peak of $86.90 a barrel, the highest
since October 2008. ICE Brent <LCOc1> declined 26 cents to
$85.62 on Tuesday in London.
"Oil made a very crucial break above $82 a barrel last week,
but if there are any slight falls (on Tuesday) it could be
ascribed to the dollar. A stronger dollar should mean weaker oil
prices," said broker Christopher Bellew at Bache Commodities.
The dollar gained nearly 0.4 percent against a basket of
currencies and traders turned bearish against the euro following
reports Greece would seek $5-$10 billion from U.S. investors to
help cover its May borrowing requirements. []
A stronger dollar makes purchases of dollar-denominated
commodities more expensive for non-U.S. buyers. []
Also buoying the dollar was data on Monday showing U.S.
services sector grew at its swiftest in nearly four years in
March and an unexpected rise in future home sales in February,
which bolstered hopes for a sustainable economic recovery and
job growth. []
INVENTORY STATISTICS
Oil prices rose more than 8 percent in the five sessions to
Monday, their sharpest 5-day winning streak this year. There was
no trading on the New York Mercantile Exchange on April 2
because of Good Friday.
Oil market attention will shift to inventory statistics due
later on Tuesday and Wednesday, after the Energy Information
Administration on Monday said U.S. gasoline prices rose to $2.88
a gallon in the last week, the highest since October 2008.
"The recent spike can be largely put down to rising crude
oil prices. Compared to other products, gasoline demand is quite
price-sensitive, illustrated by the fact that it was the only
major oil product to show growth on a global basis last year,"
analyst David Wech at JBC Energy wrote in a note to investors.
Crude inventories in the United States, the world's largest
energy consumer, probably gained for a 10th consecutive
seven-day period of measurement in the U.S. last week, a Reuters
survey showed. []
Crude stockpiles were forecast to have risen 1.7 million
barrels, according to a Reuters poll, while a 1.4 million
drawdown was expected in both gasoline supplies and distillate
stocks, comprising heating oil and diesel. []
The American Petroleum Institute releases its industry
report on Tuesday, at 4:30 p.m. EDT (2030 GMT), followed by
government figures from the U.S. Energy Information
Administration on Wednesday at 10:30 a.m. EDT.
(Additional reporting by Alejandro Barbajosa in Singapore,
editing by Amanda Cooper)
