* Loonie trades in a range of 1.2647 to 1.2594 * Oil rises slightly after hitting six-week low (Adds analyst comments, updates prices) By John McCrank Nov 18 (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Thursday, after earlier touching a six-week low, as investors assessed the greenback's recent rally amid diverging central bank policy expectations and as oil prices remained under pressure. At 2:36 p.m. EST (1936 GMT), the Canadian dollar was up 0.02%, at 1.2605 to the U.S. dollar, or 79.33 U.S. cents, having earlier touched its weakest level since Oct. 6, at 1.2627. The loonie slumped on Tuesday after domestic data showed inflation rising at 4.7% in October, in line with market expectations. "In normal times, when you've got 4%-plus inflation it would be quite positive for a currency," said Simon Harvey, FX market analyst for Monex Europe and Monex Canada. "But it came in at a time when G10 inflation is surprising to the upside consistently, whether it's the U.S., the UK or just globally, so the idea that Canadian inflation came in as expected was actually a bit of a weight on Canadian front-end bond yields." Data last week showed U.S. inflation in October running at its hottest since 1990, helping the greenback rally to a 16-month high. In Britain, inflation rose to a 10-year high, data showed on Wednesday, bolstering expectations the Bank of England will raise interest rates in December. The Canadian dollar is likely to trade sideways in the near-term ahead of key U.S. data releases in the coming month, but overall, the softness is likely to be temporary, especially against said currencies like the euro and the yen, said Erik Nelson, currency strategist at Wells Fargo Securities. "To me, Canada is one of the best positioned G10 currencies when I think about its domestic growth situation, the positive terms of trade shock from oil prices, the labor market, and the central bank likely to be one of the more aggressive hikers in the G10," he said. The price of oil, one of Canada's major exports, rose slightly after hitting a six-week low following China's announcement it was moving to tap reserves. China's move followed a Reuters report that the United States was asking large consuming nations to consider a stockpile release to lower prices as inflationary pressures, driven in part by surging energy prices, start to produce a political backlash. U.S. crude prices were up 0.68% to $78.89 a barrel, while Brent crude added 1.16% to $81.21. (Reporting by John McCrank in New York; Editing by Edmund Blair and Leslie Adler)