* Dollar slips ahead of Fed meeting
* Brent premium to U.S. crude rises to $10 a barrel
* Coming up: EIA weekly oil inventories at 1530 GMT
(Updates prices, adds details)
By Emma Farge
LONDON, Jan 26 (Reuters) - Oil rebounded on Wednesday as the
dollar fell ahead of a U.S. Federal Reserve statement expected
to focus on positive economic prospects for the world's top oil
consumer.
The Energy Information Administration (EIA) is expected to
publish its closely watched data on U.S. oil stocks at 1530 GMT.
[] Analysts in a Reuters poll expect a rise in crude
inventories.
Brent crude <LCOc1> led the rally, rising by $1.27 to $96.52
a barrel by 1419 GMT and raising its premium to U.S. crude to
more than $10, the highest since February 2009. U.S. crude
<CLc1> was up 19 cents at $86.38.
The Fed is expected to underscore reasons for optimism even
as it reaffirms its economic stimulus plan to buy $600 billion
in government debt in its 1915 GMT statement. []
"The market is looking forward to the Fed decision and
there's been a tiny pull-back in the dollar so there's a small
rebound higher," said analyst Andrey Kryuchenkov of VTB Capital.
The euro fell from a two-month high against the dollar on
Wednesday to trade little changed as investors adjusted
positions ahead of the Fed's comments.
European shares rose on Wednesday in a move that also helped
to lift sentiment on the oil market. []
The rally on crude futures came despite a more-than-expected
2.1 million-barrel rise in U.S. crude oil stockpiles last week,
according to the American Petroleum Institute. []
But this was tempered by a 5 million-barrel draw in
distillate stocks after a prolonged period of freezing
conditions in the U.S. northeast heating hub.
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Graphic on the WTI to Brent spread:
http://link.reuters.com/bev67r
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$100 OIL?
The two oil benchmarks hit more than two-year highs earlier
in January with Brent trading just 80 cents short of the $100 a
barrel milestone on Jan. 14.
Analysts at Credit Agricole CIB and Facts Global Energy said
that the immediate risk of a breach of $100 had now receded with
prices likely to trend lower through the first quarter.
"I think the fall is justified by the disappearance of very
cold weather in Europe and the restart of the Alaskan pipeline
as well as signs that the Organization of the Petroleum
Exporting Countries is increasing production," said analyst
Christophe Barret at Credit Agricole.
Freezing conditions in Europe in December have led to draws
in distillate stocks used for heating but temperatures have
since turned milder. []
Worries that inflation could prompt more interest rate hikes
in emerging markets has also dampened expectations for future
demand growth, which the International Energy Agency already
expects to slow this year.
India raised interest rates for the seventh time in 10
months on Tuesday, saying inflation was likely to continue due
to rising costs for raw materials and food. []
(Additional reporting by Florence Tan in Singapore and Alex
Lawler in London; editing by James Jukwey)
