Oil above $77 on weak dollar, lower inventory build

By Jennifer Tan

SINGAPORE (Reuters) - Oil was steady above $77 a barrel on Thursday in holiday-thinned trade, after rising 2 percent the previous day, buoyed by the dollar's sharp fall and a lower-than-expected build in U.S. crude inventories.

The U.S dollar slumped to a more than 15-month low against a basket of six currencies on Wednesday, as data suggesting the U.S. jobs and housing markets were stabilising helped boost Wall Street and overall risk appetite, denting safe-haven demand for the dollar and lifting higher yielding currencies.

U.S. crude for January delivery fell 43 cents to $77.53 a barrel by 0308 GMT, after settling up $1.94 at $77.96 on Wednesday. London Brent crude was down 32 cents at

$78.12.

"The weaker dollar and less bearish statistics from the EIA helped to push oil higher, otherwise, it would be drifting lower," said Tony Nunan, risk manager at Tokyo-based Mitsubishi Corp.

"We expect a tight range of $75 to $80 for the next week. So far, we've seen speculative buying based on the weaker dollar, and selling based on inventory data. It looks like this pattern will continue."

The U.S. Energy Information Administration's (EIA) inventory report released on Wednesday showed crude stockpiles rose 1.0 million barrels in the week to November 20, marginally less than analysts' forecasts of a 1.2 million-barrel build.

The figure was also lower than a Tuesday report by the American Petroleum Institute (API) that showed crude stocks rose 3.3 million barrels.