* Warm U.S. weather keeps crude prices below $80
* Price trading in narrow $7 range
* Oil products floating at sea cap price gains
(Adds U.S. jobless claims, updates prices)
By Emma Farge
LONDON, Nov 19 (Reuters) - U.S. crude futures drifted lower
on Thursday, hovering beneath the key $80 a barrel mark as gains
in the dollar weighed on prices and doubts about the pace of
demand recovery in the United States dampened sentiment.
The dollar inched higher against the euro to move up from
15-month lows earlier in the week while sluggish demand for
distillates due to mild weather in the United States capped
price gains. []
U.S. crude prices for December delivery <CLc1> fell 36 cents
to $79.15 a barrel by 1341 GMT, after settling up 44 cents on
Wednesday.
Brent crude <LCOc1> for January delivery fell 32 cents to
$79.15 a barrel after on Wednesday trading within cents of the
year high of $80.26 reached in October.
"We have seen some good gains in the last few days and we
are very close to important pyschological levels so it's a
slight retracement," said oil futures broker Tony Machacek at
Bache Financial.
U.S. oil prices rose above the key $80 a barrel level in the
previous session after government data showed a drop in both
crude and product inventories in the world's largest oil
consumer. []
Crude stocks fell a more-than-expected 900,000 barrels and
while distillate stocks including diesel and heating oil fell
300,000 barrels this was less than analyst projections.
But analysts said mild weather in the United States and high
global oil products stocks held in storage on land and on
floating vessels was set to limit potential upside on oil.
Floating stocks of oil products, mostly distillates, are set
to rise to over 97 million barrels by the end of the year,
according to Reuters estimates. []
"Temperatures are unseasonably mild in the United States and
crude is holding the range between the high $70s and low $80s,"
said Peter McGuire, managing director of CWA Global Markets.
On the supply side, the Organization of the Petroleum
Exporting Countries should hold oil output steady when it meets
in December as current prices do not suggest the need to change
supply, the head of Libya's National Oil Corporation said on
Wednesday. []
Oil prices have rallied from lows of around $33 a barrel
last December as investors have used liquidity pumped out by
central banks to take bets on the pace of fuel demand recovery
and gains in the oil market.
A depreciating dollar has also lured in investors who are
looking to use tangible assets such as oil as a hedge.
"Oil is very close to other assets and moves will depend on
the dollar," said Machacek.
Since hitting a high of $82 a barrel in October, U.S. prices
have traded in a narrow $7 band.
Implied oil volatility is the lowest since February 2008,
back near levels before last year's surge to a record high.
<CLATMIV>
For a graphic showing oil prices and implied volatility,
click:
http://graphics.thomsonreuters.com/119/CMD_OLVLTY1109.gif
The market shrugged off news that the number of additional
U.S. workers claiming unemployment benefits was unchanged at
505,000 in the week ending November 14. []
(Additional reporting by Nick Trevethan in Singapore;
editing by Keiron Henderson)
