UPDATE 3-Oil falls towards $84 on U.S. supply gain forecast

                                
 * Crude down nearly 5 pct since last week's 25-month high
                                
 * Dollar hits six-week high vs euro <EUR=>
                                
 * Technicals show oil could drop to $83.62 [ID:nSGE6AF013]
                                
 * Coming up: API oil inventory data; 2130 GMT
 
                                
 (Updates throughout, previous SINGAPORE)
                                
 By Christopher Johnson
                                
 LONDON, Nov 16 (Reuters) - Oil fell towards $84 on Tuesday,
weighed down by a slightly stronger dollar and ahead of expected
news of a rise in U.S. crude stockpiles.
                                
 The dollar touched a six-week high against the euro as
investors cut exposure to commodities and risk and as
anticipation of the Federal Reserve's $600 billion bond
programme pushed up U.S. Treasury yields. [FRX/] [ID:nN15274059]
                                
 Concerns over the health of the Irish economy also weighed
on the euro.
                                
 U.S. crude for December <CLc1> slipped 77 cents to $84.09 a
barrel by 0958 GMT, extending losses from the previous session.
                                
 ICE Brent <LCOc1> fell 60 cents to $86.16.
                                
 Edward Meir, senior commodity analyst at brokers MF Global
in Connecticut, said he expected markets to keep a wary eye on
Ireland and on China, which has been tightening monetary policy.
                                
 "Prices (are likely to) remain slightly on the defensive, as
investors head for the relative safety of the dollar while
waiting for developments in Ireland and China to unfold," Meir
said.
                                
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
                                
 For an interactive graphic of the euro zone debt crisis,
click: http://r.reuters.com/hyb65p
                                
 For a graphic of the performance this year of the
commodities in Reuters Jeffries CRB index, click:
                                
 http://link.reuters.com/kew48n
                                
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
                                
 Analysts expect crude stockpiles in the United States, the
world's largest energy consumer, to have edged up last week,
following a surprisingly large drawdown the week before. [EIA/S]
                                
 Crude stockpiles were seen rising 400,000 barrels, while
distillates were expected to fall 1.6 million barrels, a Reuters
poll showed.
                                
 Industry group the American Petroleum Institute (API) will
issue its latest U.S. crude oil inventory data at 2130 GMT on
Tuesday, followed by government data from the Energy Information
Administration (EIA) on Wednesday.
                                
 Crude has fallen nearly 5 percent since hitting a 25-month
peak of $88.63 last week. The sell-off was sparked by fears that
China may raise interest rates to slow its economy.
                                
 The dollar has rebounded strongly over the last two weeks as
the impact of the Federal Reserve's quantitative easing has
pushed up U.S. bond yields.
                                
 With U.S. bond yields not far from a three-month high near
2.97 percent <US10YT=RR> hit on Monday, U.S. assets look
attractive, analysts say.
                                
 The 10-year U.S. Treasury yield soared 17 basis points
<US10YT=RR> on Monday for its biggest one-day rise since June
2009, giving a broad lift to the dollar.
                                
 A stronger dollar can weigh on oil prices because it
attracts investors away from dollar-denominated crude by making
oil more expensive for users of other currencies.
 (Additional reporting by Randy Fabi in Singapore; editing by
William Hardy)