* Oil touches three-week intraday low of $77.07
* Market then recovers as dollar eases
* U.S. markets closed for Martin Luther King holiday
* Warmer northern hemisphere winter, demand concerns weigh
(Updates prices)
By Christopher Johnson
LONDON, Jan 18 (Reuters) - Oil rallied above $78 per barrel
on Monday, snapping a five-day losing streak as the dollar eased
against a basket of currencies, but concern over the outlook for
energy demand and economic recovery weighed on the market.
Oil prices began last week above $80, supported by colder
winter weather in the northern hemisphere and an influx of fresh
capital from money managers and funds wishing to allocate more
cash to commodities this year.
But poor company and banking results, including figures from
JPMorgan Chase & Co <JPM.N> on Friday, concerns about prospects
for the macro economy and oil demand, as well as rising
temperatures in Europe and the United States had pulled prices
lower for five consecutive working days.
U.S. crude for February delivery <CLc1> was up 47 cents at
$78.47 a barrel by 1532 GMT on Monday, after earlier touching a
three-week intraday low of $77.07. London Brent crude <LCOc1>
rose 24 cents to $77.35.
U.S. markets were closed on Monday for a public holiday and
volume was relatively light, traders said, suggesting the move
upwards could be short-lived.
Christopher Bellew, broker at Bache Commodities in London,
said many investors were worried about the state of oil demand.
"Funds are holding sizeable positions, the weather is
warming in the northern hemisphere and there are concerns that
there is ample supply and a fragile outlook for demand," Bellew
said. "Momentum is the key to this market and it has gained
downward momentum."
Eugen Weinberg, head of commodities analysis at Commerzbank
in Frankfurt, agreed: "Market sentiment seems to have turned
after prices failed to stay above $80 per barrel."
DEMAND
The dollar index, a gauge of the greenback's performance
against six other currencies, slipped to 77.101 by 1532 GMT,
down from Friday's U.S. close of 77.323 <.DXY>. []
The prices of oil and other commodities often move inversely
to the dollar because they are traded on international markets
in the U.S. currency.
Crude oil prices have steadily fallen since striking a
15-month intraday high of $83.95 a barrel on Jan. 11, dragged
down by weak U.S. economic data and fears of a sluggish rebound
in demand in the world's largest energy consumer.
Oil is now almost 50 percent below its lifetime high of more
than $147 a barrel hit in July 2008.
The International Energy Agency (IEA) said on Monday the end
of huge economic stimulus packages around the globe threatened a
modest recovery in global oil demand this year. []
IEA Deputy Executive Director Richard Jones told Reuters in
an interview the oil market was "pretty well supplied" so OPEC
was unlikely to change output at its March meeting.
"That is something we are watching closely," he said. "We
think these are downward risks to demand."
Traders say a raft of Chinese data this week, including
fourth-quarter gross domestic product, retail sales and
industrial production for December, could offer a lift to crude
oil prices. <ECONCN>
Investors will also watch U.S. earnings for cues with IBM
<IBM.N> and Goldman Sachs <GS.N> due to report this week.
[].
(Additional reporting by Fayen Wong in Perth; editing by Sue
Thomas)
