* Dollar slips against basket of other currencies <.DXY>
* Markets awaits EIA weekly inventory data at 1530 GMT
* U.S. crude stocks fall 4.4 mln barrels after storm - API
(Updates prices, adds link to Reuters Fundamentals Database)
By Christopher Johnson
LONDON, Nov 18 (Reuters) - Oil rose towards $80 per barrel
on Wednesday as the dollar weakened against a basket of other
currencies and after an industry report showed U.S. crude oil
stocks dropped steeply last week.
The dollar has fallen steadily for most of this year and hit
a 15-month low this week, helping drive commodities higher as
investors have sought hard assets to hedge against the
depreciating currency.
Oil is priced in dollars on world markets and energy prices
often move in the opposite direction to the U.S. currency.
"The market has picked up as the dollar has retrenched,"
said Harry Tchilinguirian, oil analyst at BNP Paribas.
"With oil trading (rightfully or wrongfully) inversely with
the dollar and positively with equities, buying interest in oil,
like other commodities has risen," BNP said in a statement.
U.S. light crude oil futures for December delivery rose more
than $1 per barrel to a high of $80.23 before settling back to
trade around $79.58 by 1355 GMT.
London Brent crude <LCOc1> gained 55 cents to $79.52.
BNP Paribas raised its average price forecast for U.S. crude
in 2010 to $81 a barrel from $78 and also increased its estimate
of the average price in the fourth quarter of 2009 to $77 per
barrel from $66.
"DRAWDOWN"
Oil prices were also supported on Wednesday by weekly data
from the American Petroleum Institute on Tuesday, which showed
U.S. crude inventories fell much more sharply than expected last
week, dropping 4.4 million after storms in the Gulf of Mexico
disrupted supplies. []
Investors awaited a report from the Energy Information
Administration at 1530 GMT, considered the most reliable data on
the U.S. oil industry, to confirm the API figures. []
"If the EIAs confirm the big drawdown, and I think they
probably will, the market could move up sharply," said Eugen
Weinberg, head of commodity research at Commerzbank.
The United States is the world's biggest oil consumer and
recession there over the past 18 months has helped keep a lid on
global demand for fuel. Expectations of economic recovery have
helped push oil prices higher this year but several analysts
argue that the market may have moved too far too fast.
"Commodities, including oil, have seemed to defy gravity
over the last few weeks, partly supported by the dollar, but
also on a false assumption that economic recovery will lead to a
further rise in prices," said Weinberg.
"That is probably wrong because the economic recovery is
already reflected adequately in the current prices," he said.
Gold <XAU=> hit a record high of $1,149.15 an ounce in
Europe on Wednesday, partly on the dip in the dollar. []
Oil has rallied from below $33 last December even though
global demand fell year-on-year for the first nine months of
2009, according to the International Energy Agency. []
For a comprehensive database of oil supply and demand
fundamentals upstream and downstream, Reuters subscribers can
click on http://bond.views.session.rservices.com/ce/
(Editing by Sue Thomas)
