* Dollar slips after UAE central bank moves to help Dubai
* Market relief that contagion appears limited so far
(Updates prices, changes quote)
By Edward McAllister
NEW YORK, Nov 30 (Reuters) - Oil prices rose slightly on
Monday as the weak dollar provided support, outweighing
concerns over debt-laden Dubai and its impact on the global
economy.
U.S. light crude oil futures <CLc1> for January were up 51
cents at $76.56 a barrel by 1:29 p.m. EST (1829 GMT). In
London, Brent crude <LCOc1> gained 68 cents to $77.86.
Signs of a sluggish recovery in oil demand and high fuel
stockpiles in the United States have kept a lid on crude
prices, which are set for a fall of around 0.5 percent this
month, their first decline since July.
Investors eyed the debt crisis in Dubai to see the effect
on the wider global economy.
"There is still uncertainty on how the Dubai situation will
play out," said Phil Flynn, analyst at PFGBest Research in
Chicago.
Financial markets shuddered last week after Dubai said it
would ask creditors of state-owned Dubai World and Nakheel, the
builder of its palm-shaped islands, for a standstill pact as a
first step towards restructuring billions of dollars of debt.
[]
But confirmation from Abu Dhabi that it would extend some
help to Dubai helped calm some market concerns. []
[]
U.S. stocks fell as investors worried that the holiday
shopping season might have gotten off to a tepid start. Asian
stocks made a tentative recovery after last week's steep
sell-off. []
SENTIMENT ON EDGE
The dollar fell against the euro and most major currencies
after the United Arab Emirates central bank promised additional
liquidity to local banks. []
A weak dollar makes dollar-denominated commodities like
crude less expensive for holders of other currencies and tends
to support prices.
The dollar and developments in Dubai will be key factors in
driving the direction of oil prices this week, analysts said.
Oil is up more than 70 percent this year, as investors
looked to signs of a recovering world economy and a potential
rebound in fuel demand.
Sentiment is on edge and analysts said there could be
another round of corrections in equities and commodities
markets if Dubai were not able to resolve its debt problems.
Eugen Weinberg, an analyst at Commerzbank, said the oil
market's response to Dubai's troubles could be a pointer to
underlying sentiment. If oil prices fell, they could slip a lot
further, possibly even to below $70 per barrel.
"It's an important day, especially for oil, but also for
metals. We could see buying in the dips and, should the markets
move higher, sentiment could improve," Weinberg said.
Mike Wittner, global head of oil research at French bank
Societe Generale, said Dubai was raising risk aversion.
"The financial markets are being fairly rational. At this
time of year investors tend to reduce risk anyway, and the
problems in Dubai are hastening that process," he said.
Implied volatility in U.S. crude futures <CLATMIV>, a
measure of risk perception based on options, rose 15 percent on
Friday, the steepest jump since October 2008.
In Europe, where the European Central Bank meets this week
amid expectations it will announce plans to exit its
super-loose monetary policy, implied stock market volatility
has soared.
(Additional reporting by Robert Gibbons and Gene Ramos in New
York and Christopher Johnson in London; Editing by Marguerita
Choy)
((Edward.mcallister@thomsonreuters.com; +1 646 223 6221;
Reuters Messaging:edward.mcallister.reuters.com@reuters.net))
