* Weak U.S. dollar on China comments pushes crude up
* Arab world violence adds to supply concerns
* OPEC meeting watched for possible production increases
(Recasts, adds quotes, changes dateline, pvs PERTH)
By Simon Falush and Zaida Espana
LONDON, June 7 (Reuters) - Oil rose slightly on Tuesday,
boosted by dollar weakness, but gains were muted due to
expectations OPEC might raise its production target this week
and to worries about the demand outlook.
U.S. crude has stayed in a $2 range for a month as concerns
that global growth would hit demand have been offset by supply
worries caused by civil war in Libya and turmoil in Syria and
Yemen.
Brent crude LCOc1 added 34 cents to $114.82 a barrel by
0854 GMT after reaching its weakest close in nearly two weeks on
Monday. U.S. light crude for July delivery CLc1 added 17
cents to $99.18 a barrel.
Investor eyes are now firmly fixed on this week's OPEC
meeting, at which major oil producers are at odds over whether
to boost production quotas. Saudi Arabia and its Gulf Arab
allies may struggle to push more than a cosmetic increase in oil
supplies.
"Sentiment is still cloudy ahead of OPEC. The only effect
counteracting at the moment is the weaker dollar, which has seen
a continuation of the trend from last week in the aftermath of
the weaker U.S. data," said Carsten Fritsch, an analyst at
Commerzbank.
The dollar fell broadly to hit a one-month low against a
basket of currencies .DXY and the euro EUR= and to a record
low versus the Swiss franc CHF= after a Chinese official
warned of the risks of excessive dollar holdings.
[ID:nLDE7560L3]
Top oil exporter Saudi Arabia and other Gulf producers,
including Kuwait and the United Arab Emirates, favour a hike in
output on concerns that high oil prices are limiting economic
growth.
Saudi Arabia is already planning to hike its own oil output
by 200,000 to 300,000 barrels per day in June. [ID:nL3E7H70EJ]
[ID:nLDE7551VM]
But delegates gathering in Vienna for the OPEC meeting on
Wednesday said a deal to do anything more than just close the
gap between OPEC's out-of-date official production target and
actual supplies could prove difficult.
"We've been stuck in a range, and investors are waiting for
the outcome of the OPEC meeting, to see what the outlook is and
how it redraws the map for world supply and demand," Olivier
Jakob, an analyst at Petromatrix.
PRICE PRESSURE
He said that any increase in supply could depress prices
significantly.
"If Saudi puts any incremental barrels on the water, it will
be very bearish and we could see WTI move to below its 200-day
moving average at around $91."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Is the global economy slowing? r.reuters.com/pad89r
U.S. crude stock levels: link.reuters.com/syh89r
OPEC production and targets: r.reuters.com/zyg89r
A 24-hour technical outlook on U.S. oil [ID:nL3E7H702J]
For a 24-hour outlook on Brent crude [ID:nL3E7H702V]
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
High fuel prices and weak U.S. economic numbers could prompt
the U.S. government's energy forecasting agency to cut its
global oil demand estimate for the second month running.
[ID:nN06122526]
But U.S. oil inventory reports from industry and government
could show that stockpiles fell slightly last week, a Reuters
poll of analysts on Monday showed. Gasoline and distillate
stockpiles were expected to rise. [EIA/S]
The United States called for a peaceful and orderly
transition in Yemen in the absence of President Ali Abdullah
Saleh, who is recovering from shrapnel wounds in Saudi Arabia.
[ID:nLDE7552JK]
Syrian forces fought gunmen in battles that left more than
120 members of the security forces dead, state television said
in the first report of large-scale armed clashes in the revolt
against President Bashar al-Assad. [ID:nLDE7552JX]
In Tripoli, loud explosions shook the town in what appeared
to be stepped-up NATO air strikes on the Libyan capital on
Tuesday morning, and rebel forces seized a town in the west,
driving out Muammar Gaddafi's forces. [ID:nLDE7552JY]
(Additional reporting by Mike Dolan and Rebekah Kebede in
Perth, editing by Jane Baird)
