Brent holds above $57 on bargain hunting, weaker dollar

SINGAPORE (Reuters) - Brent (brent.167)crude held above $57 a barrel on Friday on bargain hunting by investors, but gains were capped by a dollar that steadied after pulling back from multi-year highs on weaker-than-expected U.S. retail sales.

Asian investors were also mulling the impact from a tentative deal that would end a strike by U.S. refinery workers.

Brent for April delivery was trading up 6 cents at $57.14 by 0224 ET after ending the previous session down 46 cents. The April contract expires on Monday.

U.S. crude futures rose 5 cents to $47.10 after settling down $1.12, or 2.3 percent, in the previous session. The April contract expires on March 20.

"Oil prices have dropped quite hard. Movements now are market driven - it's bargain hunting people are going in for," said Daniel Ang, an analyst at Singapore's Phillip Futures.

Prices could also move higher once investors digest the impact from a pact to end a 40-day walkout by workers at 12 refineries, which has affected a fifth of U.S. refining capacity, Ang said.

Brent's premium to U.S. crude had climbed to more than $10 mainly due to the strike, the largest walkout by U.S. refinery workers in 35 years, he said.

The deal would boost refining volumes and that could reduce U.S. crude stockpiles, which climbed last week to the highest level for this time of year in more than 80 years, Ang said.

"When the strike's over the premium (Brent over U.S. oil) will drop down to about $4," Ang said.

Brent is still slightly down from the start of this week and could test technical support at $55.92 per barrel.

"Oil has shifted into a lower zone," said Michael McCarthy, chief market strategist at Sydney's CMC Markets.

He said investors were waiting for some direction in the oil markets, with trading volumes down by a third in the Asia time zone as large investors sat on the sidelines.

Oil prices on Friday were supported by the U.S. dollar , which posted its biggest one day fall in a month as it retreated from a 12-year high against a basket of major currencies on an unexpected fall in U.S. retail sales.

A softer greenback makes commodities denominated in the dollar less expensive for holders of other currencies and can stimulate purchases.

Investors are also eyeing developments in Libya.

Islamist militants claimed responsibility for a bomb attack in the Libyan capital Tripoli even as production from the OPEC member's western oilfields saw a surprise comeback.

(Reporting by Keith Wallis; Editing by Richard Pullin and Tom Hogue)