* US dollar falls to session lows vs yen, euro
* Crude stocks seen off 2.6 million barrels - poll
* Forecasts for warmer US weather pressure oil prices
* Coming up: API U.S. inventory data, 2130 GMT
(Recasts, updates prices throughout)
By Selam Gebrekidan
New York, Dec 29 (Reuters) - Oil fell on Wednesday but stayed near
recent 26-month highs, pulled down in light trade by profit-taking as
markets awaited the release of U.S. inventory data.
Analysts forecast a drawdown in crude oil inventories for the fourth
consecutive period last week as refiners reduced imports for year-end tax
considerations.
U.S. crude for February delivery <CLc1> edged down 28 cents to $91.21 a
barrel at 2:13 p.m. EST (19:13 GMT), while ICE Brent crude <LCOc1> fell 19
cents to $94.19 a barrel.
"We're seeing light long liquidation before the end of the year, a day
after crude showed amazing resilience, switching courses in the middle of
the stream," said Peter Beutel, president of Cameron Hanover.
U.S. crude traded as low as $90.80 earlier on Wednesday but edged
higher after the dollar fell to session lows versus the yen and euro as
U.S. bond yields dropped following a solid auction of seven-year Treasury
notes. []
Crude volumes on the New York Mercantile Exchange remained thin with
many players out due to the holidays. About 176,000 contracts had traded by
2:15 p.m. EST, well below the 576,000 contracts traded on average over the
past 30 days..
"The dollar's fall lent support to crude but there was no huge move
since there aren't a lot of people in. This is the effect of light, choppy
and directionless trade before the holidays," said Mark Waggoner, president
of Excel Futures Inc, based in Oregon.
Crude inventories in the world's biggest economy were seen down 2.6
million barrels in the week to Dec. 24, while gasoline stocks were seen up
1.4 million barrels, according to a Reuters poll of 15 analysts.
[]
U.S. oil prices hit a 26-month high at $91.88 on Monday after a major
blizzard hit Northeastern United States and similarly cold temperatures on
the other side of the Atlantic pushed up demand.
The gains, however, were later tempered by a Chinese rate increase that
threatened to slow demand in the world's second biggest oil consumer.
"The market seemed exhausted -- it's coming down a bit after all the
upward momentum in the past few days. Traders are looking ahead to next
year when supply conditions will improve. Even the correlation between the
weak dollar and higher crude prices doesn't seem as tight today," said Phil
Flynn with PFGBest Research in Chicago.
"But if the dollar continues to fall, we will see a bigger support," he
added.
The American Petroleum Institute will report its weekly inventory data
later Wednesday, delayed a day due to the Christmas holiday. The U.S.
Energy Information Administration (EIA) will issue its weekly report on
Thursday, likewise a day later than usual.
(Additional reporting by Robert Gibbons in Houston
and Randy Fabi and Dmitry Zhdannikov in London)
