* Dollar bounce, euro zone concerns dampen oil rally
* Gold hits record on inflation fear, also supported oil
* Coming up: EIA inventory data, 10:30 a.m. EST Wednesday
(Recasts, updates with settlement prices, market activity)
By Robert Gibbons
NEW YORK, Nov 9 (Reuters) - U.S. oil prices fell on
Tuesday, pressured by the dollar's rise and Wall Street's slip
after inflation concerns had lifted gold to a record high and
oil to a two-year peak.
The euro lost value against the U.S. dollar a third
straight session as investors worried about euro zone debt and
hedged bets against the greenback. []
Trading sources said oil prices had tried to consolidate
above $87 a barrel after last week's monetary easing by the
Federal Reserve and a better-than-expected U.S. jobs report
lifted prices above the previous 2010 peak from May.
U.S. crude for December delivery <CLc1> fell 34 cents to
settle at $86.72 a barrel, retreating from an $87.63 intraday
peak, highest price since $89.82 was struck on Oct. 9, 2008.
In post-settlement trading crude fell as low as $85.48.
The decline snapped a string of six straight higher closes.
Last week, U.S. crude prices posted a 6.6 percent gain, the
biggest percentage weekly gain since February.
On Tuesday, ICE December Brent crude <LCOc1> fell 13 cents
to settle at $88.33 a barrel.
"Crude futures are down, taking the cue from Wall Street,
which is falling, and as the U.S. dollar is up," said Richard
Ilczyszyn senior market strategist, Lind-Waldock in Chicago.
"Commodities have been on a rally these past two weeks and
we're seeing some froth taken out of the markets."
Expectations that the U.S. central bank's actions to
bolster the U.S. economic recovery would fuel inflation and
pressure the dollar boosted crude prices and sent gold to a
series of record peaks.
But the dollar rose against the euro as investors worried
about Irish and Portuguese debt and decided bets against the
U.S. dollar were overdone. After crude futures settled, the
euro extended its losses and the dollar its gains. (Graphic:
http://link.reuters.com/fer54q )
Gold futures turned lower as the dollar's rise prompted
heavy profit taking by investors. [] U.S. stocks ended
lower after a sell-off accelerated heading to the close. []
IEA SAYS SUPPLY PEAK AHEAD
Oil received a lift early from the International Energy
Agency's long-term energy outlook. The Paris-based agency said
global oil supplies will near a peak by 2035 and oil prices
might exceed $100 a barrel in 2015 and $200 in 2035.
[] []
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Reuters Insider interview with IEA chief Nobuo Tanaka
http://link.reuters.com/ger54q
Graphic: http://link.reuters.com/hyn54q
IEA on energy subsidies: []
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Prices had little reaction to the U.S. Energy Information
Administration boosting its 2011 world oil demand forecast by
33,000 barrels per day. []
INVENTORIES
Investors will turn their attention to weekly inventory
reports, starting with the American Petroleum Institute's oil
stocks report at 4:30 EST p.m. (2130 GMT) on Tuesday.
U.S. crude inventories were forecast to be have increased
by 1.4 million barrels in the week to Nov. 5 as imports
rebounded, a Reuters analyst survey showed. []
The survey yielded a forecast drop in distillate stocks,
including heating oil and diesel fuel, by 1.9 million barrels,
with gasoline stocks down 800,000 barrels.
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For a PDF of Reuters reports on this and related topics,
click: http://link.reuters.com/tef34q
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The API report will be followed by the U.S. EIA's report on
Wednesday at 10:30 a.m. EST (1530 GMT).
(Additional reporting by Gene Ramos in New York, Alejandro
Barbajosa in Singapore and Ikuko Kurahone and Zaida Espana in
London; Editing by David Gregorio)
