RTRS: Oil edges above $74 on soft dollar; sentiment weak
SINGAPORE (Reuters) - Oil rose back above $74 on Tuesday after a 2 percent fall a day ago, supported by a softer dollar, but forecasts for a build in U.S. crude stocks and slow economic recovery limited gains.
The dollar eased after senior Federal Reserve officials dashed speculation of a quick rise in U.S. rates, with the Fed chief cautioning that the economy still faced resistance and unemployment could stay high for some time, playing down the impact of last week's upbeat jobs report.
U.S. crude for January delivery gained 31 cents to $74.24 a barrel by 1:10 a.m. EST, after settling $1.54 lower on Monday. Brent crude rose 49 cents to $76.92.
NYMEX crude had touched its lowest level in about a week around $73.70 a barrel on Monday, undermined by gains for the U.S. currency, which saw its strongest rise in almost a year on Friday after data showing the United States lost far fewer jobs than expected last month.
A weak dollar makes dollar-denominated commodities, such as oil, less expensive for holders of other currencies and tends to support prices.
On Tuesday the dollar index was down 0.2 percent, while the euro and commodities-linked Australian dollar edged up.
"The U.S. dollar has eased in the past few hours and that is also a factor that has helped oil prices slightly," said David Moore, Commonwealth Bank's commodities strategist, who added that prices were still below the $75-80 range seen in recent months.
"The economy is still mixed," he said. "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."
The softer dollar helped gold to recover from a two-week low hit the previous day, but the less optimistic economic outlook dampened Asian equities.
Adding to the bearish undertone are predictions for a 500,000-barrel rise in crude stocks on higher imports -- the third straight week of increase -- and a 1.4 million-barrel increase in gasoline supplies in the United States.
But distillates inventories are expected to fall by 300,000 barrels, an initial Reuters poll showed.
(Reporting by Ramthan Hussain; Editing by Michael Urquhart)
