* Oil below recent range; weak demand, ample supply weigh
* U.S. crude, gasoline inventories expected to rise
(Adds link to graphic of dollar, oil correlation, updates
prices)
By Alex Lawler
LONDON, Dec 8 (Reuters) - Oil rose above $74 a barrel on
Tuesday after a 2 percent fall the previous day, supported by a
weaker dollar, but the slow recovery in energy demand and ample
supplies limited gains.
The dollar fell after comments from Federal Reserve Chairman
Ben Bernanke dampened speculation of an early rise in U.S.
interest rates. A weaker dollar makes dollar-denominated
commodities, such as oil, less expensive for holders of other
currencies and tends to support oil prices.
"The Fed is committed to maintain low rates for an extended
period of time in view of headwinds to the economy represented
by weak job and credit markets," said Harry Tchilinguirian,
analyst at BNP Paribas.
"So the dollar can be expected to reverse yesterday's gains
and oil in turn move back up a little."
U.S. crude for January delivery <CLc1> was up 15 cents to
$74.08 a barrel by 1041 GMT, after settling $1.54 lower on
Monday. Brent crude <LCOc1> rose 31 cents to $76.74.
Oil touched its lowest level since November 27 earlier in
the session. Until Monday, the market had traded in a range of
about $75-$80 a barrel since mid-October.
Investors in oil have looked to economic indicators and to
other financial markets, such as equities, this year for signs
of a recovery that would support oil demand.
"The economy is still mixed," said David Moore, Commonwealth
Bank's commodities strategist.
"While China is strong, the U.S. is unlikely to see a smooth
recovery and there will be periods of reversals. But the
anticipation of a recovery will be supportive in the coming
year."
Oil has rallied to a high for the year of $82 a barrel
reached in October from below $33 in December 2008, even though
fundamentals of supply, demand and inventories are bearish in
the view of many analysts.
Reports this week are expected to show U.S. crude oil and
gasoline inventories rose, adding to ample supplies. Crude
stocks are expected to rise by 500,000 barrels and stocks of
gasoline by 1.4 million barrels. []
The American Petroleum Institute will release its supply
report on Tuesday at 4:30 p.m. EST (2130 GMT). The U.S. Energy
Information Administration issues its snapshot on Wednesday.
For a graphic showing the correlation between oil and the
dollar, see:
http://graphics.thomsonreuters.com/129/CMD_OIL$CR1209.gif
(Additional reporting by Ramthan Hussain in Singapore; editing
by James Jukwey)
