By: Sri Jegarajah Oil prices are set to ease slightly this week, a CNBC survey showed. Analysts polled were a little cautious with six out of nine expecting some retracement or for prices to be little changed. Three called for prices to extend their gains from last week which would mean pushing further into $80 plus territory. A move with any conviction above $80 a barrel would mean a challenge of the early-January highs. Bearish forecasters said oil prices near $80 did not reflect the fundamental picture which remains weak due to bloated fuel inventories and anemic demand. "Now that oil is approaching $80 and near the top of its current channel, I would be leaning more towards 'bearish'," said Mike Sander of Sander Capital Advisors. "The global economy is still weak, we have very high unemployment, and on going government bailouts. We have not turned the corner yet to being fiscally responsible." Will last week's decision by the Fed to raise the discount rate be a 'game-changer' for oil and commodities markets? The knee-jerk reaction suggested markets were perturbed by the prospect of the end of the 'easy money' conditions that accommodative policy has provided. Still, the Fed made it clear that the discount rate move does not mean the main Fed funds target rate will be hiked immediately and markets seemed to take the move in their stride. "I'm definitely of the opinion that the sell-off and interest in U.S. dollars following the Fed announcement was overplayed," said Ben Westmore, Economist - Australia & Commodities at National Australia Bank. "I don't expect the Fed Funds Rate to move until well into the second half of this year and I feel that Bernanke had already telegraphed removal of liquidity and increase in the discount rate." Still, there's no ignoring the correlation of the commodities markets with the U.S. dollar. That's been brought into sharper relief in the wake of the Fed's discount rate hike and Eurozone sovereign debt woes. Stronger dollar stands to undermine commodities markets since a resurgent greenback makes U.S. dollar-denominated commodities more expensive for importers trading in euros, sterling or yen. "Near-term movements are being influenced by the waxing and waning of the U.S. currency," said Gavin Wendt, senior resource analyst at Mine Life. "Nevertheless, there is every chance that we will begin to see a slow and steady increase in demand for crude products, led by improving demand from emerging economies." Commodity markets will be watching Fed chairman Ben Bernanke's semiannual economic testimony before Senate and House committees Wednesday and Thursday for clues on what to expect from the Fed after the discount rate hike.

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