* Oil remains volatile, subject to exchange rate jitters
* Technicals show oil to retrace to below $81[]
* Coming Up: U.S. Fed Chairman Bernanke speech; 1215 GMT
(Updates throughout, previous SINGAPORE)
By Joe Brock
LONDON, Oct 15 (Reuters) - Oil hovered below $83 a barrel on
Friday as traders cautiously awaited a speech by the head of the
U.S. Federal Reserve for clues on the economic outlook in the
world's largest fuel consumer.
U.S. crude for November <CLc1> fell 7 cents to $82.62 a
barrel by 0740 GMT, heading for a third straight weekly close
above $80, while December ICE Brent <LCOc1> lost 26 cents to
$83.94. November Brent expired on Thursday.
The dollar steadied after plumbing a low for the year
against major currencies overnight, having dropped 7 percent
since September on expectations the Fed will soon have to flood
the banking system with freshly printed cash to support the
economy.
An indication that Fed Chairman Ben Bernanke is getting
close to this decision and perhaps considering other measures
such as targeting inflation or even gross domestic product could
unleash more dollar selling and buying of commodities.
[]
Thursday's drop in the dollar to 2010 lows kept commodities
among investors' top picks, briefly sending oil above $84,
before government data showed U.S. gasoline consumption fell 1.1
percent in the past four weeks from a year ago, while total oil
demand rose just 0.8 percent.
"The near-term picture of the U.S. oil market remains
challenging," said Stefan Graber, a commodities analyst with
Credit Suisse in Singapore.
"We expect the range-trading theme in the oil market to
extend, with temporary setbacks below $80 still possible."
Oil prices broke out of this year's predominant $70 to $80
range last month as traders anticipated a fresh round of U.S.
Federal Reserve monetary easing but are now stalling around $80
to $85 as the market weighs immediate economic conditions
against future policy moves.
OPEC
The Organization of the Petroleum Exporting Countries on
Thursday kept intact a supply policy that has served it well for
nearly two years and set aside concerns a weak dollar could
drive the oil price too high for a fragile world economy.
"The biggest challenge we have is to keep the oil market as
it is today," Saudi Arabian Oil Minister Ali al-Naimi told
reporters, indicating his satisfaction with current prices.
[]
For OPEC, "what might in advance have looked like a
potentially difficult year has instead turned out to be a very
constructive one in terms of revenue dynamics", Barclays Capital
analysts headed by Paul Horsnell wrote in a weekly report.
U.S. crude inventories dipped by 416,000 barrels last week,
the U.S. Energy Information Administration said on Thursday, far
below the 4.1-million-barrel drawdown reported by the American
Petroleum Institute on Wednesday, but against a Reuters poll
forecast for a 1.1-million-barrel increase.
Gasoline stocks fell by 1.8 million barrels, more than
expected, while distillate supplies, which include heating oil
and diesel, dropped by 255,000 barrels, less than forecast.
"The inventory drawdowns in crude oil and oil products look
constructive at first glance," Graber said.
"However, stockpiles fell because of sharply lower imports
and an unexpected drop in refinery utilisation and not because
of improved U.S. oil demand, which remains soft."
The oil market was awaiting Friday's U.S. government data on
consumer prices and retail sales in September and a preliminary
reading of consumer sentiment so far this month.
(Additional reporting by Alejandro Barbajosa in Singapore;
Editing by Sue Thomas)
