* Oil down after more than 3 percent high on stocks rally
* U.S. dollar weakens and supports oil
* U.S. stocks data expected to show 1.1 mln bbls crude
build
By Maryelle Demongeot
SINGAPORE, March 24 (Reuters) - Oil edged down on Tuesday,
coming off a more than 3 percent rise in the previous session
after a rally in Wall Street and financial stocks on a U.S.
plan to buy up distressed assets to tidy up bank balance
sheets. Improving risk appetite following new details on
the U.S. financial rescue plan, which have further weakened the
greenback, helped push oil prices to their highest intraday
level in 2009 on Monday and sent Japan's Nikkei <> average
to a more than two-month high on Tuesday. []
U.S. light crude for May delivery <CLc1> fell 17 cents to
$53.63 a barrel by 0225 GMT, having settled at $53.80, up $1.73
on Monday.
London Brent crude <LCOc1> was down 22 cents at $53.25.
"Any upside should be short-lived as commodity markets are
once again behaving as a proxy for the global economy," said
Jonathan Kornafel, Asia director of U.S.-based Hudson Capital
Energy in Singapore.
"Once traders digest the Treasury's new plan and accept
that any inflation/weak dollar danger is months if not a year
away, the market will come back off hard," he added.
A weaker U.S. dollar often sends investors to U.S.
dollar-denominated commodities as a hedge against inflation.
The dollar slid back towards the two-month low hit against
a basket of major currencies last week when investors seized on
the Federal Reserve's decision to buy large amounts of
Treasuries as a sign of the ongoing erosion of the world's
reserve currency. []
The U.S. government on Monday offered a raft of incentives
for private investors to help rid banks of up to $1 trillion in
toxic assets that plunged the world economy into crisis.
The toxic asset plan got a vote of confidence from stock
investors, with U.S. stocks surging around 7 percent on Monday,
their biggest one-day advance in nearly five months. []
But oil fundamentals have yet to show significant
improvements, with a preliminary Reuters poll forecasting a 1.1
million barrels rise in U.S. crude oil inventories last week
with imports on an upswing. []
Gasoline supplies were projected to be down by a moderate
200,000 barrels and distillate supplies, which include heating
oil and diesel, were expected to be little changed.
The analysts made their forecasts ahead of weekly inventory
reports to be released by industry group American Petroleum
Institute on Tuesday at 2030 GMT and the U.S. Energy
Information Administration on Wednesday.
Technical analysis shows resistance at $59.74, a 23.6
percent Fibonacci retracement of the entire downward movement
from the third to the four quarter of 2008. (For more technical
analysis, click http://www.reutersindia.net/oil.htm)
Oil prices have climbed from under $33 last December due
in part to aggressive supply cuts from OPEC. But prices remain
almost $100 below last summer's peak as the global economic
crisis erodes consumption.
"Sentiment is positive as some risk appetite returns. But
signals are running ahead of fundamentals," said French bank
Societe Generale in its Oil Drivers report.
The bank's analysts see GDP and demand still weak for the
time being while the Organization of the Petroleum Exporting
Countries (OPEC) has decided against further supply curbs.
(Editing by Ben Tan)
