* Oil rises more than $1 on supply concern, weak dollar
* Israel-Iran tension continues to support
* Traders await U.S. oil stocks, payrolls, ECB meeting
(Updates crude prices, dollar movement)
SINGAPORE, July 2 (Reuters) - Oil rose more than $1 a
barrel on Wednesday, within sight of Monday's record high above
$143 on forecasts that global supply will lag demand and
expectations the European Central Bank will raise interest
rates later this week.
U.S. crude <CLc1> rose $1.24 to $142.21 a barrel by 0559
GMT, while London Brent crude <LCOc1> gained $1.43 to $142.10.
The International Energy Agency on Tuesday cut its global
oil supply capacity forecast by 2.7 million barrels per day
(bpd) to 95.33 million bpd by 2012, boosting prices already
lifted by tension between Iran and Israel.
Traders also bought crude on the weak dollar, which
softened against the euro on Wednesday ahead of Thursday's
European Central Bank meeting, which is widely expected to
conclude an interest rate hike to deal with quickening euro
zone inflation.
"The U.S. dollar is an each-way bet and will likely cause
some volatility in prices," Mark Pervan, a senior commodities
analyst at the Australian & New Zealand (ANZ) Bank, said in a
research note.
"On balance, if Iran, Nigeria and Israel can stay out of
the news for the rest of the week, traders should take
profits," he added.
Oil hit a record $143.67 a barrel on Monday, taking its
gains for the year to nearly 50 percent, in part due to
concerns that tension between Israel and Iran could disrupt
supply from the Middle East Gulf.
Iran's Revolutionary Guards had said it would impose
controls on shipping in the Strait of Hormuz should the country
be attacked. About 40 percent of all seaborne oil trade passes
through the Strait, according to the U.S. EIA.
The U.S. State Department on Tuesday criticised comments by
an unidentified senior U.S. defense official who told ABC News
there was an increasing likelihood Israel would attack Iran
over its nuclear programme. []
Adding to supply worries, OPEC President Chakib Khelil said
the cartel did not have enough spare capacity to replace
Iranian oil if Tehran were to cut exports due to an attack.
[]
Traders will look out for U.S. oil inventories data later
on Wednesday and the monthly U.S. employment report due on
Thursday for further indications of the economic outlook for
the world's top oil consumer.
"We can expect oil price fluctuations to be limited today
and tomorrow as the market is awaiting stocks in the U.S. and
payroll tomorrow," said Ryuichi Sato, a commodity analyst at
Mizuho Corporate Bank.
Weekly U.S. oil inventory data is expected to show a
100,000-barrel fall in crude stocks, a 200,000-fall in gasoline
stocks, and a 1.9-million-barrel build in distillates. []
(Reporting by Chua Baizhen, Editing by Michael Urquhart)
