* Analysts, officials expect high oil price volatility
* U.S. crude, gasoline, distillates stockpiles rose -poll
* Coming Up: U.S. API inventory report; 2030 GMT
* For a technical view on oil prices, see: []
(Recasts with price drop, adds China inflation, currency)
By Alejandro Barbajosa
SINGAPORE, May 11 (Reuters) - Oil fell below $77 on Tuesday
as a stronger dollar signalled lingering doubts about a
resolution to Europe's debt crisis, while Chinese inflation
data raised concern about potential monetary tightening
measures.
The dollar jumped about 0.5 percent against a basket of
currencies <.DXY> on Tuesday, a day after the European Union's
agreement to an emergency package of about $1 trillion to
restore confidence in the eurozone sent the common currency
soaring.
China's inflation edged up to an 18-month high in April and
bank lending topped expectations, while a central bank adviser
signalled the country was ready to let the yuan move more
freely, managing currency "with reference to a basket of
currencies." [] []
U.S. crude for delivery in June <CLc1> fell 31 cents to
$76.49 a barrel at 0448 GMT, still about $2 higher than a
12-week low hit on Friday, as the European debt crisis roiled
markets. ICE Brent for June <LCOc1> crude slipped 27 cents to
$79.85.
"The euro rallied and then has come back down as the
initial relief was over," said Stefan Graber, a commodities
analyst with Credit Suisse in Singapore.
"Whether confidence is fully restored depends on the
uncertainties about the implementation of this program. I don't
think we are out of the woods just yet."
The European Union over the weekend crafted the biggest
financial system rescue package since collapse of Lehman
Brothers in 2008 triggered a U.S. government response, sending
stock markets soaring around the world on Monday.
On Monday, prices jumped as much as $3.40, before settling
up $1.69 at $76.80. Intra-day volatility will probably continue
in the coming days as participants gauge the full implications
of the package on markets, Graber said.
"Beyond the current turmoil, we have to monitor liquidity
in the oil market; should we see liquidity drop, prices could
fall further. Should we see stabilisation, and with the real
economy still recovering, then we think prices are going to
move higher" to between $80 and $90 in the third quarter,
Graber said.
After last week's wild swings in the stock market, the
at-the-money implied volatility index for front-month crude
futures rose rose to 40.43, the highest since December 2009.
The eurozone package consists of 440 billion euros in
guarantees from euro area states, plus 60 billion euros in a
European stabilisation fund and another 250 billion euros from
the International Monetary Fund. []
The size of the aid package surprised market participants
and boosted confidence that oil demand growth will continue.
OPEC Secretary-General Abdullah al-Badri said he expected
the rescue package to boost oil prices back above $80 a barrel,
but warned of wild price swings as the global economy continued
on its path to recovery. []
Front-month U.S. oil futures on Monday ended back above the
200-day moving average of $76.47, after dropping below it
during last week's steep slide. Crude had most recently dipped
below that average in February during intraday trade.
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Attention in the oil market is set to turn to weekly U.S.
inventory statistics to be published over the next two days.
U.S. crude inventories likely rose by 1.6 million barrels
last week on higher imports and slightly lower refinery
utilisation, a preliminary Reuters poll of analysts showed on
Monday. []
Supplies of distillates including heating oil and diesel
probably added 1.2 million barrels, while gasoline stocks rose
700,000 barrels, the poll showed.
The industry group American Petroleum Institute will
release its inventory report for the week to May 7 on Tuesday
at 2030 GMT and the U.S. Energy Information Administration's
report is scheduled for 1430 GMT, on Wednesday.
(Reporting by Alejandro Barbajosa; Editing by Ed Lane)
