* Gasoline stocks jump 2.9 mln barrels vs forecast +1 mln
* Equities dip on fears recovery expectations too high
* U.S. dollar strengthens, leading investors away from oil
(Recasts and updates throughout, previous dateline LONDON)
By Joshua Schneyer
NEW YORK, Oct 7 (Reuters) - Oil prices dipped below $70 a
barrel on Wednesday as a strengthening dollar prompted less
investment in crude and after U.S. data showed fuel stocks
surged last week in the world's biggest energy consumer.
The dollar gained 0.2 percent against a basket of foreign
currencies on Wednesday, on optimism that third-quarter U.S.
corporate earnings will show signs of an economic rebound. The
dollar rebounded from an eight-month low against the yen.
[]
Weakness in the dollar had supported oil and other
commodities priced in the greenback in recent days, as
investors bought goods that typically hold their value when the
dollar weakens.
Government figures showed crude inventories in the United
States unexpectedly fell in the week to Oct. 2 by 1 million
barrels, versus analyst expectations of a 2.2 million barrel
rise. []
But the weekly report from the U.S. Energy Information
Administration (EIA) also showed a surge in fuel stocks in the
world's biggest energy consumer, a harbinger of sluggish demand
recovery from industries and consumers.
Gasoline stocks leapt by 2.9 million barrels, far more than
the 1 million barrels predicted by the market as refiners upped
production. Distillate stocks -- which include diesel and
heating oil -- rose by 700,000 barrels, more than double the
predicted 300,000-barrel build.
"The fuel inventories jumped a lot, and that's a bearish
factor, but one offset by the crude draw," Tradition Energy's
Gene McGillian said.
"Crude is pivoting around $70 a barrel with factors on
either side to hold it there. The key is going to be when
demand figures for gasoline and distillate pick up."
The EIA said product demand has recovered by 5 percent
since the same time last year, when a global financial crisis
was deepening, and following crude's jump to a record near $150
a barrel last July.
U.S. crude for November delivery <CLc1> fell $1.20 to
$69.68 a barrel by 12:03 p.m. EDT (1603 GMT), after gaining on
Tuesday by 47 cents. London Brent crude <LCOc1> fell $1.16
cents to $67.40.
Oil has rebounded from an 11-week low of around $66 in
late September, but some analysts caution it could slip back in
the near term.
"Oil looks like it's on shaky ground as we approach the
U.S. third-quarter (corporate) reporting season. A lot of
near-term price gains have been won off a rebounding equity
market," said Mark Pervan, a commodities analyst at the
Australia & New Zealand Bank.
A dip in European and U.S. equities weighed on oil on
Wednesday, after a strong stock market jump in Asia had seen
prices rise as high $71.76 a barrel earlier Wednesday.
(Additional reporting by David Sheppard in London and Fayen
Wong in Perth; Editing by Lisa Shumaker)
(Reporting by Joshua Schneyer)
