* U.S. crude, gasoline inventories expected to rise
* Dollar gains against basket of currencies
(Recasts, updates throughout)
By Edward McAllister
NEW YORK, Dec 8 (Reuters) - Oil prices fell more than $1 to
below $73 a barrel on Tuesday, extending losses to a fifth
straight session, as the dollar strengthened and a downward
revision to the U.S. government's forecast for 2010 global
demand growth eroded sentiment.
The dollar gained against a basket of currencies <.DXY>,
making dollar-denominated commodities more expensive for
holders of other units.
U.S. crude for January delivery <CLc1> traded down $1.12 at
$72.81 a barrel by 2:03 p.m. EST (1903 GMT), adding to losses
of $4.44 or 4.7 percent over the previous four days. In London,
Brent crude <LCOc1> fell $1.03 to $75.40 a barrel.
The last four days' losses are the biggest since prices
fell $5.66 on Sept. 23 and Sept. 24.
The U.S. Energy Information Administration's monthly
short-term outlook revised lower its forecast for increased
demand in 2010, and its forecast for OPEC and non-OPEC
production was higher.
"People were looking for U.S. oil demand to be higher and
so, with the cut in the EIA forecast and a smaller increase
overall, that's a little disappointing," Mark Waggoner,
president, Excel Futures, Huntington Beach, California.
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For a graphic showing the correlation between oil and the
dollar, see:
http://graphics.thomsonreuters.com/129/CMD_OIL$CR1209.gif
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U.S. stocks fell on Tuesday after a disappointing outlook
from 3M Co and a second straight month of falling domestic
sales at MacDonald's Corp triggered concern about consumer
spending. []
Oil markets have looked to wider economic data and equity
markets this year for a sign of a turnaround in the economy
that could bolster crude demand and drain high inventory levels
in key consumers, such as the United States.
Crude oil stocks at the giant storage hub in Cushing,
Oklahoma -- the delivery point for the New York Mercantile
Exchange's oil futures contract -- have swelled, deepening the
discount of front-month crude futures to second-month futures.
This market condition, called a contango, encourages more
storage onshore and offshore, and drags down prices further.
"Cushing storage are the leading reason January prices
(are) lower and the continuing expansion of the contango has
traders worries about the likelihood of further increases in
floating storage; most on-land storage is already full," said
Peter Beutel, president of Cameron Hanover in New Canaan,
Connecticut.
Weekly U.S. inventory data from the American Petroleum
Institute, due out at 4:30 p.m. EST Tuesday, was expected to
show a 500,000-barrel build in crude stocks in the week to Dec.
4 and a rise of 1.4 million barrels in gasoline inventories.
[] Weekly data from the U.S. Energy Information
Administration was due out on Wednesday morning.
Oil prices have rallied to a high for the year of $82 a
barrel, reached in October, from below $33 in December 2008,
even though fundamentals of supply, demand and inventories are
bearish in the view of many analysts.
(Reporting by Edward McAllister, Matthew Robinson, Gene Ramos
and Robert Gibbons in New York; Alex Lawler in London; Editing
by Walter Bagley)
