* Oil product stocks fell last week, crude rose-EIA
* Aggressive Fed monetary easing priced into oil -analysts
* US services sector, factory orders expanded last month
* US dollar slides, in reversal from morning gains
* Coming Up: U.S. FOMC statement at 2:15 p.m. EDT
(Recasts, adding details and prices throughout.)
By Joshua Schneyer
NEW YORK, Nov 3 (Reuters) - Oil prices firmed to near $85 a
barrel, after touching a six-month high earlier Wednesday, as
weekly data showed U.S. fuel stocks fell last week and traders
bet that the U.S. Federal Reserve would announce economic
stimulus measures that could boost commodities prices.
U.S. stocks of gasoline and distillate fuels fell more
sharply than expected last week, while crude stocks rose as
expected, as the country's refineries cut utilization rates to
the lowest since March, weekly data from the U.S. Energy
Information Administration showed. [] (Graphic:
http://link.reuters.com/man63q )
A Fed statement scheduled for 2:15 p.m. (1815 GMT) was
expected to detail a new round of monetary stimulus to spur the
fragile economic recovery, which could make commodities priced
in dollars more attractive to investors.
U.S. crude for December delivery <CLc1> firmed 81 cents to
$84.71 a barrel by 1:43 p.m. EDT, after rising to a six-month
high of $85.36 earlier Wednesday. ICE December Brent <LCOZ0>
was at $86.36, up 95 cents.
Anticipation of Fed monetary easing actions have helped to
weaken the dollar by around 9 percent since late August. After
gaining earlier in trade, the U.S. currency fell against a
basket of foreign currencies ahead of the Fed statement
<.DXY>.
A weak dollar can make commodities more attractive to
investors. Fed easing may cheapen borrowing costs, potentially
expanding the pool of dollars flowing into commodities
markets.
The expected Fed measures have already been priced into oil
markets, paving the way for potential sell-offs should the
plans to purchase U.S. government debt appear less aggressive
than consensus estimates of $80 billion to $100 billion per
month in a Reuters poll of economists. Anything less could firm
the dollar and pressure oil prices, analysts say.
"A lot of the Fed announcement has already been factored
in. (Fed officials) are probably not in favor of decimating the
dollar any further. If the dollar rebounds that would suggest
that the oil market would retreat a bit," said Gene McGillian
of Tradition Energy in Connecticut.
Estimates for how long the Fed will continue easing with
debt purchases and how much it will spend overall varied from
$250 billion to $2 trillion in a Reuters poll.
"From a risk point of view, the (Fed) risks are rather
skewered to disappointment, and could limit the upside in oil
prices today," Commerzbank oil analyst Carsten Fritsch said.
U.S. FUEL INVENTORIES FALL, ECONOMIC DATA IMPROVE
U.S. crude stockpiles rose by 2 million barrels last week,
roughly in line with analyst expectations. But distillate
stocks shrank by 3.6 million barrels and gasoline stocks fell
by 2.7 million barrels, whittling down overall U.S. fuel stocks
by more than expected last week, as U.S. refinery utilization
fell to 81.8 percent, the lowest rate since March.
The U.S. services sector grew more quickly than expected in
October and factory orders posted their largest gain in eight
months. Also, a private report showed U.S. private employers
added more jobs than expected in October.
Some analysts also linked oil's rise on Wednesday to
results of the U.S. mid-term elections on Tuesday, which put
Republicans -- often considered more friendly toward the oil
industry -- back in control of the House of Representatives and
saw them gain ground in the Senate.
"Republicans are perceived as more oil friendly so the
election may be helping support (oil)," said Richard Ilczyszyn
senior market strategist at Lind-Waldock in Chicago.
(Additional reporting by Gene Ramos, Robert Gibbons and
Edward McAllister in New York, Zaida Espana in London, and
Alejandro Barbajosa in Singapore; Editing by David Gregorio)
