* Oil settles highest since October 2008
* Stronger dollar, inventory data expectations cap gains
* Coming Up: U.S. oil inventory reports from API
(Recasts, updates prices at settlement, adds quote)
By Edward McAllister
NEW YORK, April 6 (Reuters) - Oil inched up toward $87 a
barrel on Tuesday, rallying for a sixth consecutive session, as
recent positive economic data launched futures to a fresh
18-month high.
Gains were tempered by a stronger dollar, while investors
remained cautious ahead of weekly U.S. oil inventory data later
on Tuesday.
U.S. crude for May delivery <CLc1> rose 22 cents to settle
at $86.84 a barrel, the highest settlement since October 2008.
In London, ICE Brent <LCOc1> rose 27 cents to settle at
$86.15.
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COLUMN-Riyadh's resolve faces early test as oil rises: John
Kemp []
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Oil prices rose more than 2 percent on Monday after U.S.
manufacturing, home sales and jobs data boosted optimism about
a recovery in the world's top oil consumer.
"As we turn our attention to the inventory reports, we will
see if they finally give us some fundamental support to push
prices higher," said Gene McGillian, analyst at Tradition
Energy in Stamford Connecticut.
"It will be interesting to see if there is a pattern where
the market looks and says we don't have the supply-demand
numbers to be up here which makes the longs nervous and tends
to make them bail pretty quickly."
U.S. crude inventory statistics were due later on Tuesday
from the American Petroleum Institute (API), and on Wednesday
from the U.S. Department of Energy's Energy Information
Administration (EIA).
Crude inventories in the United States probably gained for
a 10th consecutive week last week, an updated Reuters survey
showed on Tuesday. []
Crude stockpiles were forecast to have risen 1.8 million
barrels, according to a Reuters poll, while a 1.2 million
barrel drawdown was expected in distillate stocks comprising
heating oil and diesel, with an 800,000-barrel draw expected
for gasoline. []
A stronger dollar helped cap crude's gains on Tuesday. The
euro fell broadly after reports that Greece wants to amend a
European Union aid deal rekindled worries over Athens's deficit
problems. []
A stronger dollar denotes a move to safer havens from
assets deemed more risky, like commodities or equities and
tends to pressure crude prices.
The U.S. Energy Information Administration cut its 2010
world oil demand growth forecast by 10,000 barrels per day from
its previous estimate to 1.46 million bpd on Tuesday, which
also weighed on sentiment [].
"We're starting to come to a point where these oil prices
could start to put the economic recovery at risk. Whatever we
had last year was at an average $62 a barrel. It's another
thing to continue on the recovery path with $90 oil," said
independent oil analyst Olivier Jakob at Petromatrix in
Switzerland.
Big oil producers could face a test as oil heads well above
the $70-$80 range trumpeted by OPEC members this month as good
for them as well as consumer nations.
(Additional reporting by Gene Ramos and Robert Gibbons in New
York, Chris Baldwin in London, Alejandro Barbajosa in
Singapore; editing by Marguerita Choy)
