* Oil falls as dollar gains after Trichet speaks
* New U.S. weekly unemployment claims lowest in 14 months
* ECB keeps main interest rates as expected at 1 pct
(Updates prices, adds comment)
By Chris Baldwin
LONDON, Dec 3 (Reuters) - U.S. crude fell on Thursday after
comments by the European Central Bank's Chairman on the decision
to keep their main interest rate at 1 percent sent the dollar up
sharply.
NYMEX crude for January delivery <CLc1> fell 45 cents to
$76.15 a barrel by 1530 GMT, after rising as high at $78.95
earlier in the session.
Brent crude <LCOc1> rose 10 cents to $77.98 per barrel after
touching a session high of $78.91.
"We are not signalling anything in terms of hardening our
monetary policy, absolutely nothing," ECB President Jean-Claude
Trichet said at a news conference in Frankfurt.
The dollar was up 1.1 percent against the yen, while the
euro pared earlier gains against the greenback as markets
weighed ECB comments on possible exit strategies.
"(The) dollar is responding strongly to Trichet's comments,
so assets like crude oil that rose in response to its recent
declines are now abiding the flip-side of that phenomenon," said
John Kilduff at Round Earth Capital in New York.
New U.S. jobless claims fell to their lowest in 14 months
last week, Labor Department data showed, leading U.S. Treasury
Secretary Timothy Geithner to tell CNBC television that the
economy was slowly healing. []
OIL FUNDAMENTALS
Analysts said ECB interest rates were already priced in to
the market, and had been widely expected.
"The end result over the next six months is you have low
interest rates with unleveraged cash in bank accounts seeking
somewhere to go in search of yield, and this favours risk
appetite and supports equities," said senior BNP Paribas
commodities analyst Harry Tchilinguirian.
This can also support oil, but its weak fundamentals have
modified the potentially bullish impact.
"Oil will keep doing what it has been doing in relation to
equities since March. It's not that oil prices are disconnected
from fundamentals, it's that front month prices are reacting to
equity markets," Tchilinguirian said.
European stocks were slightly firmer on Thursday, with the
FTSEurofirst 300 <> index of top European shares rising
0.3 percent, but up 58 percent from its lifetime low in March.
[]
Oil hit a high of $82 a barrel in October, but failed to
hold above that level as the combination of excess supply,
sluggish demand and nervousness about a fragile world economy
have knocked the market lower.
Adding to OPEC's challenges, the biggest non-OPEC oil
exporter Russia set a fourth consecutive monthly output record
in November, averaging more than 10 million barrels per day.
[]
The Organization of the Petroleum Exporting Countries meets
to reconsider its output policy on Dec. 22 in Angola.
http://graphics.thomsonreuters.com/129/CMD_OILSPRD1209.gif
(Additional reporting by Robert Gibbons in New York and Nick
Trevethan in Singapore; editing by James Jukwey)
((christopher.baldwin@reuters.com; +442075427526))
