* Dollar slides, world stock markets gain
* U.S. crude inventories down less than expected
* Traders await U.S. Fed decision
(Updates prices)
NEW YORK, Oct 29 (Reuters) - Oil jumped nearly 9 percent to
just under $68 a barrel on Wednesday as global markets rallied
and the dollar fell.
World stock markets put in a second consecutive session of
strong bargain-hunting gains the day after a huge rally on Wall
Street, amid widespread expectations of a sharp cut in U.S.
interest rates. []
U.S. crude <CLc1> rose $5.13 to $67.85 a barrel by 1:45
p.m. EDT (1645 GMT), after hitting a session high of $68.91.
London Brent crude <LCOc1> surged $5.64 a barrel to $65.93.
"The oil market is being pushed around by equities market
and reacting to their surge late yesterday and overnight," said
Gene McGillian, analyst at Tradition Energy in Stamford,
Connecticut.
"The dollar has sold off some and oil was technically
oversold and ready for a correction higher. But we'll have to
see what happens at 2:15 (p.m. EDT) and how the markets react
to the Fed news."
Wall Street roared to its second-best advance ever on
Tuesday. On Wednesday, investors paused to gauge if the market
would continue to bounce back from five-year lows and awaited a
decision by the U.S. Federal Reserve on rates.
The Fed was widely expected to cut its benchmark fed funds
rate by at least 50 basis points from the current 1.5 percent.
Its decision was expected around 2:15 p.m. EDT (1815 GMT).
The global financial crisis has hit oil demand and sent
crude prices tumbling from record highs over $147 a barrel
struck in July.
The U.S. dollar sank on Wednesday on a modest easing in
risk aversion, as investors grew comfortable paring holdings of
the currency given a rise in stock prices around the world.
[]
Earlier this year, investors poured cash into oil and other
commodities as a hedge against inflation and the slumping
greenback.
"A big cut in the Fed Funds rate could pressure the dollar
and boost commodities with crude oil at the forefront," said
Chris Jarvis, senior analyst at Caprock Risk Management.
"In short, it's more about the dollar and the equity
markets than the weekly EIA data numbers."
U.S. INVENTORIES
U.S. crude inventories last week rose 500,000 barrels, less
than the 1.4 million barrel gain expected by analysts,
according to data released by the U.S. Energy Information
Administration. []
Distillate stocks rose 2.3 million barrels -- above the
800,000 barrel increase forecast by analysts, while gasoline
stocks fell by 1.5 million barrels compared with analysts
expectations of a 1.2 million barrel build.
Gasoline demand continued to fall, down 3.4 percent over
the past four weeks versus the year-ago period, while total
product demand was down 7.8 percent for the same period.
Some OPEC members have said the producer group could cut
oil production again to help support prices, after agreeing to
a 1.5 million barrel per day (bpd) reduction last week.
"If there is a surplus in the market, if nobody needs the
production, then a decision might be taken," Kuwait's oil
Minister Mohammad al-Olaim told reporters. []
Venezuela would back an additional OPEC production cut,
possibly of 1 million barrels per day, if it were necessary to
stabilize crude oil prices, President Hugo Chavez said on
Tuesday. []
(Reporting by Chris Baldwin in New York; Jane Merriman in
London, Maryelle Demongeot in Singapore; Editing by Marguerita
Choy)
