* Fall in U.S. crude stocks, weak dollar supports
* U.S. bank proposes had knocked oil lower
* $75 a barrel key support level
By Emma Farge
LONDON, Jan 22 (Reuters) - Oil steadied around $76 on Friday
as commodities across the board held their ground after dropping
on U.S. President Barack Obama's proposed reforms of banks'
trading. [] []
Crude recoverd from a one-month low as a weaker dollar and
an unexpected drop in U.S. crude stocks lent support.
U.S. crude <CLc1> was 2 cents up at $76.10 a barrel at 1130
GMT, after earlier touching the lowest level since Dec. 23 of
$75.62 a barrel. ICE Brent crude <LCOc1> rose 12 cents to
$74.70.
Obama's proposals to cut proprietary trading at large banks
tempered gains on concerns about a possible retrenchment of
banks and funds in the commodity sector. []
"The initiative did unnerve many players in the commodity
space, as the move may imply less trading by funds who are
associated, promoted, or financed by banks," said oil analyst
Edward Meir of MF Global.
Oil prices rose to 15-month highs near $84 a barrel in early
January, partly due to an influx of money following a hike in
fund allocations. []
"Potentially, some funds will need to revise their exposure
for the second half of the year," said Petromatrix analyst
Olivier Jakob, referring to both Obama's plan and the package of
proposals unveiled last week by the U.S. futures regulator, the
Commodity Futures Trading Commission.
"For now, it will weigh on sentiment in a global sense,"
said Jakob.
Click here for a graphic showing the impact of Obama's
proposals on commodity markets so far:
http://graphics.thomsonreuters.com/0110/CMD_OBPRC0110.gif
For a related analysis on the implications of the Obama
proposals see here: []
FALLING INVENTORY
A fall in inventory levels in the world's biggest oil
consumer, shown in data released on Thursday, supported prices
U.S. crude stocks fell by by 400,000 barrels last week and
distillates, including heating oil, also fell by a more than
expected amount according to the Energy Information
Administration, raising hopes about the pace of demand recovery
in the world's largest energy consumer. []
The dollar fell broadly against other currencies and this
also helped boost oil prices. A weak dollar tends to support oil
as it makes it cheaper for non-dollar buyers. []
Analysts said that $75 a barrel was likely to remain a key
support level, defining the bottom of the current $75-$80
trading range.
"In the rally, speculators added length. $75 a barrel needs
to hold and if it doesn't, there could be further liquidation of
positions and further falls," said Jakob.
Concerns that oil-consuming nations could take steps to
temper growth may also weigh on prices going forward, analysts
said. The world's number two oil consumer China reported fourth
quarter growth of 10.7 percent on Thursday, its first double
digit figure since 2008. []
"Any efforts by the Chinese government to slow the economy
would affect demand for raw materials," said Serene Lim, a
Singapore-based oil analyst at ANZ.
(Additional reporting by Alejandro Barbajosa in Singapore;
Editing by William Hardy)
