* Oil down on dollar strength, high oil inventories
* Erasing early gains on higher Asian stocks
* U.S. July jobs data aids Asian shares on Monday
* Oil prices not bad at current levels - OPEC head
* U.S. crude oil net length jumped in previous week-CFTC
data
(Recasts, updates prices)
By Fayen Wong
PERTH, Aug 10 (Reuters) - Oil prices slipped below $71 a
barrel on Monday, as the dollar's strength and worries about
high oil inventories helped counter earlier gains on the back
of rising Asian stocks amid hopes for an economic recovery.
Despite losing ground against the yen, the greenback held
most of its gains against a basket of currencies after its jump
of more than 1 percent on Friday. Japan's Nikkei <> closed
up 1.1 percent, tracking Friday's Wall Street gains.
U.S. crude <CLc1> fell 31 cents to $70.62 a barrel by 0654
GMT, retracing earlier losses. London Brent crude <LCOc1> fell
29 cents to $73.30 a barrel.
Prices rose more than 2 percent last week amid generally
upbeat earnings and economic indicators that raised hopes of
higher fuel demand, touching a five-week high on Friday. But
they closed the day down more than $1, the biggest decline
since July 29, after the dollar's unexpected surge on positive
jobs data.
U.S. employers cut 247,000 jobs in July, far fewer than
expected and the least in any month since last August,
according to a government report. []
"The U.S. payrolls data would have been supportive for
crude, but investors are now focusing on the strength in the
U.S. dollar," said David Moore, a commodities analyst at the
Commonwealth Bank of Australia.
"While we'll probably see another bunch of positive Chinese
data over the next few days, the story remains that oil
supplies are quite ample at the moment and that could be a key
downside risk for oil prices in the near-term."
The dollar lost ground to the yen on Monday as Japanese
exporters and short-term speculators took advantage of its jump
the previous session on U.S. jobs data. The U.S. dollar index
<.DXY> dipped 0.2 percent. []
Oil prices are not bad at current levels for the
Organization of Petroleum Exporting Countries (OPEC), the head
of the group said on Sunday, reinforcing expectations that the
cartel was unlikely to cut output at a meeting next month.
[]
STOCKS WEIGH
With little in the way of fresh data due on Monday, traders
will be focusing this week on Tuesday's raft of Chinese oil
import and production figures, which could show a new record
high for crude imports as refiners ramp up, as well as global
oil demand revisions from the three main official energy
bodies.
U.S. crude oil inventories could also extend their recent
rise as refiners shut for maintenance, some analysts warned.
More gains in U.S. stocks -- particularly in the
mid-continent area -- may keep pressure on the unusually wide
premium on the European Brent crude oil contract over the U.S.
grade, which has hovered around minus $3 since late July, the
widest since two unprecedented declines in January and
February.
But other analysts saw the trend reversing soon. The spread
<CL-LCO1=R> dipped about 11 cents to -$2.73 a barrel on Monday.
"We believe the dislocation between WTI and Brent that has
been driven by a rapid build in Cushing is not sustainable as
we expect rising runs and a shut arb to correct the
imbalances," Goldman Sachs said in a report. "We expect
refinery runs to pick up in the coming weeks owing to
improved....margins and to unplanned outages in refineries in
the area coming to an end."
The number of crude oil speculators betting on further
gains in New York Mercantile Exchange crude oil prices jumped
in the week to Aug. 4, with net length rising from under 5,000
lots to over 34,000 lots, regulatory data showed.
[]
(Additional reporting by Osamu Tsukimori in Tokyo)
(Reporting by Fayen Wong and Jonathan Leff in Singapore;
Editing by Clarence Fernandez)
