(Drops extraneous word in first paragraph)
* Oil posts $5 drop since Monday on economy, demand,
supplies
* Downbeat U.S. economic data seen a dampener
* CFTC rules seen not as strict as expected, relief for
now
(Adds US industrial production forecast, updates prices)
By Alejandro Barbajosa
SINGAPORE, Jan 15 (Reuters) - Oil fell to just above $79 a
barrel on Friday and was set for its first weekly drop in more
than a month on disappointing economic data and expectations
for reduced heating demand in the United States.
U.S. retail sales declined in December for the first time
in three months, the Commerce Department said on Thursday,
while Labor Department data showed more people sought jobless
benefits last week. []
Prices edged up briefly a day earlier after U.S. regulators
announced proposals to put a cap on the size of positions
dealers can hold, aiming to limit speculation, which traders
considered not as stringent as feared. []
U.S. crude oil futures for February delivery <CLc1> fell 35
cents to $79.04 a barrel at 0506 GMT. Prices, which have fallen
every day this week, have shed about $5 from a 15-month
intraday high of $83.95 on Monday, and touched a 2010 low of
$78.37 two days ago.
The new front-month March contract for London Brent crude
<LCOc1> slid 47 cents to $78.10.
"The fundamentals are weak," said Tetsu Emori, a fund
manager at Tokyo-based Astmax Co Ltd. "U.S. economic data is
not really improving much and this may push down NYMEX prices
to below $78."
REGULATION DETAILS
The long-awaited proposals from the U.S. Commodity Futures
Trading Commission (CFTC) will apply to the four most-traded
energy contracts on the two major exchanges, NYMEX and ICE.
It remains to be seen if the limits -- which the CFTC said
would affect only the 10 biggest position holders if
implemented immediately -- are enough to satisfy Congress
members who have clamoured for regulatory action since oil
prices jumped to a record above $147 in July 2008.
Emori said it was too early to say whether the new
regulation will affect the market or prices.
"We probably need some more details on how they will
regulate each category of participants," he said.
"It is quite difficult for them to distinguish which part of a
bank's trading activity is hedging or speculation."
Crude and fuel inventories at top consuming nation the
United States rose last week despite unusually cold weather.
Temperatures are now forecast to exceed the seasonal norm,
suppressing consumption.
U.S. demand for distillates, a fuel category which includes
heating oil, was 4 percent below year-earlier levels in the
four weeks ended Jan. 8, a government report showed on
Wednesday.
"Stockpiles are rising and demand is lower than expected,"
Emori said.
Markets awaited the publication of further U.S. economic
indicators later on Friday, including industrial production.
[]
(Editing by Michael Urquhart)
