* Dollar weakness boosting commodity risk appetite
* IEA's Tanaka says high prices dampening demand
* Technicals show Brent crude to rise to $124
* Coming Up: EIA oil data at 1430 GMT
(Updates prices)
By Zaida Espana
LONDON, April 20 (Reuters) - Brent crude rose above $122 a
barrel on Wednesday, helped by a weaker dollar and a rebound in
equities.
ICE Brent crude <LCOc1> was 87 cents firmer at $122.20 a
barrel by 1348 GMT, albeit lower after briefly climbing to
intra-day highs of $123.15.
U.S. crude <CLc1> was up $1.08 at $109.36 a barrel, but off
highs of $109.92 a barrel earlier in the session.
"The big driver at the moment is the weakness of the
dollar," GFT market strategist David Morrison said. "We are
talking a dollar weakness story lifting everything, and crude in
particular."
The dollar index <.DXY>, which measures the greenback
against a basket of currencies, was down 0.89 percent by 1228
GMT. A weaker greenback can support dollar-denominated
commodities by rendering them less expensive for other currency
holders.
"The dollar index has broken significantly below a long-term
multi-year trendline, so we could see the selling accelerate.
It's a shorthand for commodity traders to look at the dollar
index, which gives some support to commodities going forward,"
Morrison added.
Spot gold prices breached $1,500 for the first time ever,
and silver <XAG=> hit a 31-year high on Wednesday. []
European shares [] rallied on upbeat earnings from
companies including Intel <INTC.O> and on the back of well
covered euro bond auctions from Portugal, Spain and Germany
boosting and lending support to commodities. []
[] []
"There are external factors -- the strong equities and
weaker dollar -- which are not oil-related but answer for
today's gains," Commerzbank analyst Carsten Fritsch said.
The International Energy Agency's executive director, Nobuo
Tanaka, issued the latest in a series of warnings on the effect
of strong oil prices on demand in top consumers the United
States and China. []
Producer group OPEC needs to boost output in June or July to
douse further price rises, Tanaka said, adding that if crude
prices stayed at $100 a barrel or more for the rest of 2011, the
market could see demand destruction similar to that of 2008.
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Technical outlook on Brent http://link.reuters.com/wuz98r
Technical outlook on WTI http://link.reuters.com/vuz98r
More on Middle East unrest: [][]
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U.S. OIL DATA
OPEC has to date declined to make a coordinated increase in
supply, despite growing concerns about demand destruction as
world oil prices rocketed up to 2-1/2-year highs of $127 a
barrel earlier this month amid unrest in the Middle East and
North Africa.
"We don't have much fundamental news, but Saudi Arabia
recently cut output in the last few weeks, which was not
expected, and all in all prices could go up a bit," LBBW analyst
Frank Schallenberger said.
Ahead of the Easter holiday, oil prices are likely to remain
in a range in reduced trading, according to Commerzbank's
Fritsch.
"I think prices will remain in a narrow range between
$120-$123 a barrel and no breakout is expected ahead of the
Easter weekend," Fritsch said.
Data from the American Petroleum Institute on Tuesday showed
U.S. gasoline stocks fell 1.8 million barrels and distillate
stocks dropped 3.4 million barrels last week in an unexpected
decline, which helped ease fears over eroding demand. []
"The API numbers were rather bullish and set a good platform
for the oil data out of the U.S. tonight to boost prices," said
Serene Lim, analyst at ANZ Bank in Singapore.
Ahead of the U.S. Energy Information Administration's weekly
data due at 1430 GMT, a Reuters poll shows crude oil inventories
are expected to have increased for the seventh straight time
last week as crude imports rose faster than refinery demand.
[]
(Additional reporting by Francis Kan in Singapore; editing
by Jane Baird)
