* Move above $75 triggers short-covering
* U.S. manufacturing posts sixth straight month of
expansion
* U.S. crude inventories probably edged lower last week
(Updates prices, adds comment)
By Alejandro Barbajosa
SINGAPORE, Feb 2 (Reuters) - Oil pared gains on Tuesday as
the dollar strengthened, with the market's attention turning to
forecasts for steady U.S. crude inventories after prices topped
$75 earlier on optimism about the economy.
The U.S. dollar rose after Australia's central bank
surprised markets by leaving its interest rates unchanged,
sending the Australian dollar down. []
March U.S. crude <CLc1> was up 32 cents at $74.75 at 0540
GMT, after touching $75.44 earlier, a rebound of over $3 from
last week's 2010 lows. London ICE Brent <LCOc1> rose 22 cents
to $73.33.
"The big gains were linked to expectations of recovery, but
people are reassessing oil market fundamentals, looking to the
next inventory report to derive some guidance," said David
Moore, a commodity strategist with the Commonwealth Bank of
Australia.
"We have a situation where demand in the U.S. still seems
quite subdued. We have seen a fairly marginal movement in the
dollar, that might be having a negative impact on the oil
price," More said.
U.S. crude stockpiles probably slipped by 200,000 barrels
in the week ended Jan. 29 following disruptions at a Texas
port, while inventories of distillates, including heating oil
and diesel, may have declined by 900,000 barrels, a Reuters
preliminary survey showed. []
But gasoline stocks likely posted a larger gain of 1.3
million barrels, the poll showed.
Industry group American Petroleum Institute's inventory
report will be released at 2130 GMT on Tuesday, followed by
government statistics from the U.S. Energy Information
Administration on Wednesday at 1530 GMT.
"Demand for oil isn't really improving," said Tetsu Emori,
a fund manager at Tokyo-based Astmax Co Ltd. "We don't see any
sign of real recovery. There is a huge amount of inventories in
the physical markets."
SHORT-COVERING
U.S. crude for March delivery <CLc1> reached its highest
intraday price since Jan. 22 earlier after prices touched $75,
triggering automatic buy orders.
"People are quite nervous around $75," Emori said. "There
was short-covering after prices broke above that level. In the
very short term, the market has been oversold, so some people
see it as a good time to buy on dips below the $75-$80 range."
An industry report showed on Monday that the U.S.
manufacturing sector grew in January at a faster rate than
expected, in a sixth straight month of expansion.
The Institute for Supply Management (ISM) index rose to its
highest since August 2004, a sign the world's top economy is
recovering from the deepest recession in decades, which could
boost oil demand. []
Ship traffic was back to normal operations along the
Sabine-Neches Waterway on Sunday after a tanker collision and
oil spill on Jan. 23 shut the channel that supplies crude oil
to four U.S. refineries. []
(Editing by Michael Urquhart)
