* IEA shows global fuel demand to grow in Q4
* Weekly U.S. EIA data due at 1600 GMT
* Dollar steady near 15-month lows
(Updates prices, adds detail, adds quote)
By Emma Farge
LONDON, Nov 12 (Reuters) - Oil dipped below $79 a barrel on
Thursday as an expected hike in U.S. crude stocks outweighed
both a weak dollar near 15-month lows and an IEA report that
said global oil demand will return to growth this quarter.
Delayed weekly inventories data out of the world's largest
fuel consumer the United States are set to show a 700,000 barrel
rise in crude stocks, a Reuters survey showed. []
This will follow a bigger-than-expected increase of 1.2
million barrels from the American Petroleum Institute. []
U.S. crude futures fell 66 cents to $78.62 a barrel by 1158
GMT, in a week where prices have crept above the psychologically
key $80 level every day.
Brent crude futures <LCOc1> fell 52 cents to $77.43 a
barrel.
The price dip came despite a report from the International
Energy Agency (IEA) showing that global oil demand will grow in
the fourth quarter for the first time in over a year. []
Its forecast for 2010 demand at 86.2 million barrels per day
is more bullish than two preceding surveys this week from OPEC
and U.S. government agency the Energy Information
Administration. [] []
HIGH STOCKS
But analysts said that traders have already factored in the
more positive demand picture and that this expectation helped
crude rally above $80 a barrel in recent weeks.
"Most market participants have already played the game based
on a pretty strong demand recovery and it's not that
surprising," said Andy Sommer, senior oil analyst with EGL
Group.
He added that even in an environment of more robust fuel
demand, it will still take a long time to clear swollen stocks
of oil and oil products stored at land and on floating vessels.
"The overall inventories picture is still bearish," he said.
The IEA estimated that the volumes of oil products, mainly
heating oil, in floating storage was over 80 million barrels.
Analysts said that weakness in the dollar, near 15-month
lows against a basket of currencies, was likely to curb oil
losses going forward. []
Oil and the dollar tend to be inversely correlated because a
weak dollar makes the commodity relatively cheap for non-dollar
buyers.
Expectations that U.S. interest rates will remain near zero
for the foreseeable future is also increasing the appeal of
higher-yielding assets such as oil and gold.
"If we weren't tracking the dollar and gold, oil would be a
lot lower. A lot of people are just looking at oil as another
financial asset to hold," said Rob Montefusco, an oil trader
with Sucden Financial.
Gold prices hit record highs above $1,120 an ounce on
Thursday. []
(Additional reporting by Felicia Loo in Singapore; Editing
by William Hardy)
