UPDATE 7-Oil dips as Wall Street, dollar drag

                                
 * Wall Street down on weak U.S. consumer confidence
                                
 * U.S. dollar gains against euro
                                
 * Number of ships storing crude at sea slips
                                
 (Recasts, updates prices, details)
                                
 By Richard Valdmanis
                                
 NEW YORK, Aug 28 (Reuters) - Oil prices slipped below $72
on Friday as losses on Wall Street and gains in the U.S. dollar
dragged on commodities markets.
                                
 U.S. crude for October <CLc1> fell 56 cents to $71.93 a
barrel by 12:30 p.m. EDT (1630 GMT). London Brent <LCOc1> fell
54 cents to $71.97 a barrel.
                                
 The losses came as a report showing U.S. consumer
confidence at four-month lows pulled Wall Street stock indexes
into negative territory, in turn pushing the dollar up against
the euro. [.N]
                                
 Commodities markets have tended to move in tandem with
equities and contrary to the greenback as investors look to
stocks as a lead indicator of economic performance and buy
resources as a hedge against inflation.
                                
 Oil's losses Friday reverse much of Thursday's $1.06-gain,
made on the back of better-than-expected GDP and jobs data in
the United States, the world's largest energy consumer.
                                
 Supporting optimistic sentiment, data on Friday showed U.S.
consumer spending rose in July and the U.K. economy shrank
slightly less than expected in the second quarter.
[ID:nN28358241] [ID:nLS658169]
                                
 "The vast majority of economic data that continues to
circulate around the media airwaves is positive and suggestive
that the worst is definitely over and the recovery has likely
begun in most economies around the world," said Dominick
Chirichella, senior partner, Energy Management Institute, Point
Pleasant, New Jersey.
                                
 But some analysts said stronger economic data in the short
term does not overcome a gloomier long-term outlook.
                                
 "Despite our confidence in the recovery process over the
next six months, there is precious little indication from the
energy side that industrial activity in the U.S. is
recovering," analysts at J.P. Morgan wrote in their Oil Markets
Weekly note.
                                
 Unsold crude stored in tankers at sea continued to hang
over the oil market but had declined since the spring.
                                
 Norway's Frontline, the world's biggest independent oil
tanker shipping group, said it estimated that 40 to 45 very
large crude carriers (VLCCs), or around 10 percent of the world
fleet, were storing crude oil.
                                
  Frontline had told Reuters on Aug. 6 that around 50 VLCCs
were being used to store around 100 million barrels of oil,
down from a peak of around 60 VLCCs in April.
                                
 (Reporting by Richard Valdmanis in New York, Chris Baldwin
in London and Ramthan Hussain in Singapore; Editing by Lisa
Shumaker)