* 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
(Updates with API oil inventory data, paragraphs 15-17)
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 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 plunged 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 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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Oil prices had little reaction to the U.S. Energy
Information Administration boosting its 2011 world oil demand
forecast by 33,000 barrels per day. []
U.S. OIL INVENTORIES
Investors got the first snapshot of weekly inventory
reports from the American Petroleum Institute late Tuesday. The
API reported crude stocks fell 7.4 million barrels in the week
to Nov. 5. []
The API said gasoline stocks fell 3.4 million barrels and
distillate stocks fell 4.0 million barrels.
After the API report's release, U.S. crude prices pared
losses that had been extended in post-settlement trade, and
ended Globex trading down only 66 cents.
Ahead of the API report, U.S. crude inventories were
forecast to be have increased by 1.4 million barrels, a Reuters
analyst survey showed. []
Distillate stocks, including heating oil and diesel fuel,
were expected to be down by 1.9 million barrels, with gasoline
stocks falling 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 more closely watched U.S. EIA's inventory report is set
for release 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 Sofina Mirza-Reid)
