* Firmer dollar, China's expected policy tightening weighs
* Fed seen standing put on rates after 2-day policy meet
* OPEC seen keeping output targets steady at Wednesday meet
(Updates price, adds comment)
By Chris Baldwin
LONDON, March 15 (Reuters) - Oil fell below $81 a barrel on
Monday, pressured by a strengthening dollar ahead of economic
data from the United States, an OPEC meeting this week and
China's looming bank credit rate decision.
U.S. crude for April delivery <CLc1> fell 63 cents to $80.61
per barrel by 1220 GMT, after settling at $81.24 on Friday.
London Brent crude <LCOc1> was down 59 cents at $78.80.
The dollar rose broadly on Monday as investors took refuge
in its safe-haven status after fears of more liquidity
tightening measures by China's central bank pummelled Asian
stocks, though analysts said oil demand would continue to grow.
"We've got OPEC looming this week, but China is really the
story at the moment, plus whether the Fed can keep its hawkish
tone, because we're pretty solid at above $80," said James
Hughes, market analyst at CMC Markets in London.
A stronger dollar tends to pressure oil because it makes
dollar-denominated commodities more expensive for other currency
holders
U.S. INDUSTRIAL DATA
The market will scrutinise U.S. February industrial output
data later on for further insight into the health of the world's
largest economy, and a statement from the Federal Reserve at the
end of its two-day interest rate-setting meeting on Wednesday
for evidence the recovery is still on track.
At 1315 GMT, the Federal Reserve releases industrial output
and capacity utilisation data for February.
Economists expect a 0.1 percent fall in production and
capacity usage of 72.6 percent, compared with January's rise of
0.9 percent in production and a capacity usage of 72.6 percent.
U.S. consumer sentiment declined slightly in early March,
with Americans less positive about the job outlook, a survey
released on Friday showed. []
But February retail sales rose unexpectedly, despite heavy
snow storms that were thought to have kept shoppers at home and
bolstered hopes of a sustainable economic recovery.
[]
The Fed is expected to hold benchmark rates near zero and
reiterate its pledge to keep them low for an "extended period"
due to lingering weakness in the U.S. jobs market and nagging
doubts over the solidity of the economic rebound.
But since U.S. consumers are buying more and companies
appear to be on the verge of hiring again, policymakers in the
Fed may ponder how long to keep its ultra-low rate pledge.
[]
CHINA MOVES
China's central bank is seen raising bank reserve
requirement ratios as early as this week, while some say it may
wait a while before raising benchmark deposit and lending rates.
"On China, we do not believe that the early monetary
tightening moves are negative for China's GDP and oil demand
outlook," said Mike Wittner, global head of oil research at
Societe Generale in their quarterly Commodities Review.
On the supply front, the market will also eye the outcome of
OPEC's meeting later this week.
The Organization of the Petroleum Exporting Countries, which
pumps at least one in every three barrels of oil, meets in
Vienna on Wednesday to discuss production policy.
Officials have said they do not expect a change in targets
while prices are within their desired range. []
OPEC has restricted output since the onset of the financial
crisis to support prices. But the group's compliance with its
officially targeted cut of 4.2 million barrels per day (bpd) has
slipped to just 53 percent as prices have risen.
(Additional reporting by Jennifer Tan in Singapore, editing by
Amanda Cooper)
