By Maryelle Demongeot
SINGAPORE, June 4 (Reuters) - Oil fell below $124 a barrel
on Wednesday, extending losses triggered by a rallying dollar
as traders awaited U.S. data expected to show rising oil
stocks.
U.S. light crude for July delivery <CLc1> fell 34 cents to
$123.97 a barrel by 0155 GMT after tumbling $3.45 a day ago,
taking it more than $10 below its record high two weeks ago.
Oil and other commodity markets fell after the U.S. dollar
rose close to a three-month high in response to Federal Reserve
Chairman Ben Bernanke's explicit warning about the inflationary
threat from a weak U.S. currency.
London Brent crude <LCOc1> for July delivery fell 38 cents
to $124.20 a barrel.
"The big theme for today is the EIA report. We'll wait and
see what it holds," said David Moore, an analyst with
Commonwealth Bank of Australia.
The U.S. government's Energy Information Administration
will release its weekly data at 10:35 a.m EDT (1435 GMT),
forecast to show bearish rises in both crude oil and products
inventories. []
Analysts polled by Reuters expect an 800,000-barrel rise in
U.S. crude stocks in the week ended May 30, as imports
increased and delays in the off-loading of import cargoes
eased.
Distillates inventories, which include diesel and heating
fuel, would rise by 1.4 million barrels, in line with seasonal
norms, while gasoline stocks could gain 400,000 barrels on
higher production and larger imports.
BEARISH SIGNS MULTIPLY
Rising U.S. oil stocks could send oil prices tumbling
further, adding to a strengthening dollar worries that high oil
prices have started to dent global energy demand, and as
increasing regulatory scrutiny could cool speculation.
The dollar was little changed on Wednesday, holding big
gains against the euro and major currencies made the previous
day. []
Bernanke said the weak U.S. dollar was adding to price
pressures and the Fed, along with the U.S. Treasury, was
carefully monitoring currency markets, suggesting greater
concern in Washington about the dollar and the potential for
dollar-supportive intervention. []
The dollar's trade-weighted index -- a gauge of its
performance against six major currencies -- was up 0.06 percent
at 73.372 <.DXY> after surging as much as 1.3 percent from
Tuesday's lows.
Weakness in the greenback has been one factor driving
investment in energy, agriculture and metals by encouraging the
buying of dollar-denominated commodities as a hedge against
inflation.
Oil prices have also fallen from a record $135.09 hit on
May 22 on mounting evidence that energy demand is being hurt.
Asian countries, which have led growth in fuel consumption,
are starting to cut costly subsidies that have sheltered
consumers from high prices, with Indonesia, Taiwan and Sri
Lanka announcing subsidy cuts recently.
India is expected to raise prices on Wednesday, and
Malaysia said on Tuesday it would scrap fuel price controls in
August in a move that could double Asia's second-cheapest pump
prices.
The U.S. Commodity Futures Trading Commission has unveiled
moves since last week to increase surveillance of the commodity
futures markets in a move that dealers said could trim the pace
of speculation. []
(Editing by Clarence Fernandez)
