* Dollar rally outweighs positive economic signs
* Crude slide now 8 days long
* High U.S. stocks and contango in focus
(Recasts, updates prices, market activity to settlement)
By Edward McAllister
NEW YORK, Dec 11 (Reuters) - Oil fell for the eighth
consecutive session on Friday, edging below $70 a barrel as a
stronger dollar pressured prices, outweighing positive economic
data from the United States and China.
U.S. crude for January delivery <CLc1> fell 67 cents to
settle at $69.87, matching an eight-day losing streak last seen
in Oct 2003. Over the past eight trading days, front month
crude has sunk $8.50, nearly 11 percent.
Brent crude futures <LC0c1> rose 2 cents to settle at
$71.88, after five straight days of losses.
The U.S. dollar rallied, boosted by higher-than-expected
U.S. retail sales in November. [] [] A
stronger dollar induces investors to sell off commodity
positions and tends to pressure crude prices.
"The dollar's strength is overwhelming other inputs. Energy
prices seemed to benefit the most from the dollar's weakness
all year, and now it's payback time," said John Kilduff,
partner at Round Earth Capital in New York.
This quarter, some investors have shifted money out of the
sinking dollar and into tangible assets such as oil and gold.
This had helped to support oil in a band between $75 and $82 a
barrel in October and November.
But prices broke below this range earlier this week,
leaving a more uncertain outlook for crude.
Investors have looked to wider economic data this year for
signs of economic recovery and a potential rebound in energy
demand.
U.S. equities rose on Friday as the retail sales and
consumer spending numbers reinforced investor confidence that
the economy was recovering. []
U.S. consumers stepped up their spending in November and
grew optimistic this month, unexpectedly strong data showed.
[]
Earlier, a forecast from the International Energy Agency
(IEA) showed world oil demand will rise by almost 1.5 million
barrels per day (bpd) in 2010 to 86.3 million bpd, and the rate
of demand growth will also accelerate. []
The report came after the U.S. Energy Information
Administration revised down its own world oil demand forecast
for 2010 on Tuesday. []
In early trading, strong industrial growth figures out of
China had supported prices.
China's November industrial output surged to its strongest
since June 2007, underscoring the economy's robust recovery
from the global downturn, and analysts expected the trend to
continue in coming months. []
OVERSUPPLY
Earlier this week, the EIA reported stocks at the U.S.
delivery hub of Cushing in Oklahoma rose 2.5 million barrels to
33.4 million barrels. []
This inventory overhang has depressed front-month U.S.
crude prices relative to oil futures, resulting this week in a
WTI crude market contango -- or a premium of distant futures
prices over prompt month prices -- of more than $2 a barrel,
the widest WTI crude market contango since August.
For graphic showing steepening of the forward curve, see:
http://graphics.thomsonreuters.com/129/CMD_NYOIL1209.gif
"There is a strong message in the oil market and that is
weakness. The contango is widening significantly and this
points to physical oversupply," said analyst David Wech at JBC
Energy, referring to both inventories on land and in floating
storage.
Distillate and gasoline stocks rose last week, despite cold
weather, as supply remained ample versus demand.
The volume of refined oil products stored on ships floating
in the sea increased to 98 million barrels at the end of
November, the IEA said on Friday. []
(Additional reporting by Robert Gibbons and Gene Ramos in New
York and Emma Farge in London; Editing by David Gregorio)
