* Prices off two-year high on risk aversion -analyst
* Technicals show oil may retrace to $85.65 []
* Coming Up: U.S. API oil inventories; 2130 GMT
(Adds reports to be released this week, updates prices)
By Alejandro Barbajosa
SINGAPORE, Nov 9 (Reuters) - Oil fell for the first session
in seven as concern about euro zone debt provided support for
the dollar, while forecasts indicated U.S. crude stockpiles
rose for the fifth time in six weeks.
U.S. crude for December <CLc1> fell 26 cents to $86.80 a
barrel at 0524 GMT, after reaching $87.49 on Monday, the
highest since October, 2008. ICE Brent <LCOc1> dipped 30 cents
to $88.16.
German September industrial output unexpectedly fell,
adding to euro woes related to a political impasse ahead of a
key Irish budget vote. The dollar rose 0.24 percent against a
basket of currencies on Tuesday, bucking the prevailing trend
since June. <.DXY>
"It's just a general return to risk aversion that is
driving the markets today," said Michelle Kwek, an analyst at
Informa Global Markets in Singapore.
"Oil has the dollar factor inside, and when the dollar
rebounds, prices should come down. If the global economy is
slowing, that should dictate prices lower."
U.S. crude inventories probably increased by 1.4 million
barrels in the week to Nov. 5 as imports rebounded, a Reuters
poll of analysts showed on Monday. []
But a drawdown of 1.8 million barrels was forecast on
average for distillate fuel, which includes include heating oil
and diesel, down for the seventh consecutive week, while
gasoline supplies fell 1 million barrels, lengthening drawdowns
to the third week in a row, according to the survey.
"The drop in fuels should be looked at more closely than
the increase in crude because now we are approaching winter,
and that should lift demand," Kwek said.
Industry group, the American Petroleum Institute, will
issue its report on Tuesday at 2130 GMT, followed by the U.S.
Energy Information Administration's (EIA) government data on
Wednesday.
NO NEED FOR MORE OUTPUT
The Organization of the Petroleum Exporting Countries sees
no need to boost its output when it meets next month, two
officials from the group said on Monday, even though oil prices
have rallied to a two-year high above $87 a barrel.
[]
"I don't see any need to raise output," said Shokri Ghanem,
chairman of Libya's National Oil Corporation, referring to
OPEC's Dec. 11 meeting in Quito, Ecuador. []
"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," he said.
Saudi Arabia's oil minister, Ali al-Naimi, last week said
oil at $70 to $90 was comfortable for consumers. That was
higher than the $70 to $80 range the top exporter had
previously called ideal, and prices rose after his remarks.
For a PDF of Reuters reports on this and related topics,
click: http://link.reuters.com/tef34q
Oil markets were also focused on the release of three
monthly reports this week. The EIA on Tuesday will release its
revised monthly forecast for U.S. and world oil consumption,
which will be followed by two other important demand outlooks,
from OPEC on Thursday and the International Energy Agency on
Friday.
The EIA last month lowered its estimate for oil use, but
with American businesses stepping up hiring and the Federal
Reserve aiming to pump more money into the economy, the
prospects have increased for higher oil demand, analysts said.
[]
The IEA will also publish its long-term World Energy
Outlook for 2010 on Tuesday.
Gold added to a record breaking run, hitting a new high
above $1,400 an ounce as investors sought safe havens in the
face of a number of uncertainties, including the euro-area debt
concerns and this week's G20 leadership summit in Seoul.
[]
(Editing by Ed Lane)
