Oil drops below $61 on supply glut, strong dollar

By Simon Falush

LONDON (Reuters) - Brent oil fell by more than $1 towards $60 per barrel on Wednesday, weighed down by strong supply in the United States and a rising dollar.

Brent for February delivery dropped $1.04 to $60.65 by 1132 GMT after gaining $1.58 on Tuesday.

U.S. crude fell $1.02 to $56.12 a barrel, after closing $1.86 higher in the previous session.

Trade was thin as many in the European and U.S. market were off for the Christmas break.

Data from the American Petroleum Institute (API), an industry group, showed U.S. crude stocks rose by 5.4 million barrels in the week ended Dec. 19. Analysts had expected a drop of 2.3 million barrels.

In Europe, gasoline stocks reached their highest in five months in the Amsterdam-Rotterdam-Antwerp oil hub, data from PJK International showed.

A supply glut in the United States and elsewhere has helped push oil down some 46 percent since it reached this year's peak above $115 per barrel in June.

"There was a large build in the API data and there are high stocks for now, although strong U.S. GDP growth should help demand," said Olivier Jakob, analyst at Petromatrix in Zug, Switzerland.

The dollar index stayed close to its highest since April 2006 after a revised third-quarter U.S. gross domestic product report surprised with the fastest growth in 11 years.

A strong dollar makes commodities priced in the greenback more expensive for holders of other currencies.

Investors were awaiting official U.S. oil inventory data to be released by the U.S. government's Energy Information Administration on Wednesday.

(Additional reporting by Keith Wallis in Singapore; Editing by Jason Neely)