* Dollar falls as Russia says new reserve currency needed
* U.S. weekly crude stocks seen falling 1.8 million barrels
(Adds comment, updates prices)
By Chris Baldwin
LONDON, June 16 (Reuters) - Oil rose above $71 a barrel on
Tuesday as the dollar slid after Russia said the world needed
new reserve currencies, while stock market declines weighed on
expectations of economic recovery.
Russian President Dmitry Medvedev, at a regional security
summit in Siberia, called for "the creation of a supranational
reserve currency" a day after Russia's finance minister said the
dollar was unlikely to lose its key status in the near term.
[] []
U.S. crude <CLc1> rose 85 cents to $71.47 by 1016 GMT after
falling below $70 earlier in the day when the dollar was
stronger. London Brent crude <LCOc1> rose 96 cents to $71.20.
"Financial markets do seem to be the dominant factor at the
moment," said Tony Machacek, a broker at Bache Commodities in
London.
"The dollar made a turn-around mid-morning, and looks to be
starting to back off on these Russian comments."
A weaker dollar can strengthen commodity markets by
improving the purchasing power of buyers using the American
currency. The dollar was down .83 percent against the world's
most traded currencise <.DXY>.
Expectations of an economic recovery drove crude prices to a
near eight-month high above $73 a barrel last week.
The Bank of Japan held its interest rate at 0.1 percent and
upgraded its economic assessment for the second straight month
as rising exports and output supported the view that the worst
of the recession might be over. []
But Asian stock markets painted a bleaker picture, with
Japan's Nikkei <> down 2.9 percent and a broad measure of
regional shares <.MIAPJ0000PUS> down 1.4 percent, as investors
worried a strong rally from March lows had run ahead of
corporate prospects.
Traders will look out for weekly U.S. government inventory
data on Wednesday, which is expected to show a 1.8
million-barrel fall in crude oil stocks, a 600,000-barrel rise
in gasoline stocks and 900,000-barrel rise in distillate stocks,
based on a preliminary Reuters poll.[]
The American Petroleum Institute (API) will issue its report
later in the day.
With oil rising almost $20 since the end of April, there
were concerns that speculation in the market had pushed oil
prices up too high, too fast.
OPEC Secretary General Abdullah al-Badri said too quick a
rise in oil prices could harm a global economic recovery, though
a price of $80 a barrel would not stem growth. []
The head of the International Monetary Fund, Dominique
Strauss-Kahn, also sounded a cautious note, saying on Monday the
worst of the global crisis was not yet over. []
(Additional reporting by Chua Baizhen; Editing by Anthony
Barker)
