* Strong dollar pressures oil, gold prices
* Coming up: U.S. API weekly crude, dist, gasoline stocks
* For a technical view on crude prices, see: []
(Updates prices, graphic, changes dateline, pvs SINGAPORE)
By Christopher Johnson
LONDON, May 4 (Reuters) - U.S. crude oil fell to under $86 a
barrel on Tuesday, dampened by a stronger dollar and an expected
rise in U.S. crude and fuel stocks.
The dollar hit an eight-and-a-half month high against the
yen and a one-year peak versus the euro after robust data that
suggested the Federal Reserve will lead its counterparts in
Europe and Japan in raising interest rates this year. []
The move brought oil prices down from 19-month highs reached
on Monday on positive economic news, and pressured other
commodities such as gold <XAU=> [].
U.S. crude for June <CLc1> fell 25 cents to $85.94 by 0813
GMT, after hitting an intraday high of $87.15 on Monday, the
strongest front-month price since $89.82 traded on Oct. 9, 2008.
London Brent crude <LCOc1> slipped 21 cents to $88.73 a
barrel, maintaining a big premium over U.S. crude futures, also
known as WTI, due to high crude oil inventories in the United
States and a tight physical crude oil market in the North Sea.
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For a technical chart on crude prices, click:
http://graphics.thomsonreuters.com/gfx/WT_20100405084512.jpg
For a graphic on dollar/oil correlation, click
http://graphics.thomsonreuters.com/gfx/RSW_20100405150342.jpg
For a chart showing Brent premium over U.S. crude, click
http://link.reuters.com/qap52k
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SLICK
Dealers said oil prices received some support from worries
that the giant slick in the Gulf of Mexico could disrupt crude
oil supplies in the United States.
BP <BP.L> said on Tuesday work had begun to drill a relief
well to stop the spill. []
"The possibility of supply disruptions, when combined with
the strong-looking chart formations, will likely make the case
for somewhat higher prices over the short-term," said Edward
Meir, senior oil analyst at brokers MF Global.
U.S. crude inventories probably rose last week as the deep
discount for prompt U.S. crude oil widened the contango
structure of the futures curve, spurring refiners to import more
for storage, a preliminary Reuters poll showed on Monday.
Ahead of weekly inventory data from industry group, the
American Petroleum Institute (API), and the U.S. government
Energy Information Administration (EIA), analysts forecast crude
stocks increased by 1.2 million barrels last week. []
If so, U.S. crude stocks -- at their highest level since
mid-June 2009 -- would have risen for the 13th time in 14 weeks,
and could in some way ease concerns over a possible supply
squeeze if the busted well gushing oil is not contained quickly.
Distillate stocks, including heating oil and diesel, were
forecast up 1.8 million barrels, for the fifth-straight week of
a build, while gasoline was seen rising just 200,000 barrels
after a surprise drawdown the week before, the poll showed.
The dollar rose around 0.3 percent against a basket of
currencies on Tuesday <.DXY>, boosted by data on Monday showing
U.S. manufacturing posted its fastest pace of growth in nearly
six years in April while data on construction and consumer
spending pointed to further strength in the U.S. economy.
A strong U.S. currency makes dollar-denominated commodities,
such as oil, more costly for holders of other currencies and
tends to dampen prices.
China's manufacturing sector is still growing briskly,
HSBC's China Purchasing Managers' Index (PMI) showed on Tuesday.
[]
(Additional reporting by Judy Hua in Singapore; editing by
William Hardy)
