* EIA says U.S. oil products stocks rise, crude falls
* U.S. tax cuts boost economic recovery hopes
* China interest rates, OPEC meeting in focus
(Recasts with U.S. inventory report, updates prices)
By Dmitry Zhdannikov and Alex Lawler
LONDON, Dec 8 (Reuters) - Oil fell on Wednesday to around
$88 a barrel as a U.S. government report showed inventories of
gasoline and other fuels rose in the world's top consumer,
countering lower crude stocks.
Gasoline stocks rose by a more-than-expected 3.81 million
barrels, the Energy Information Administration said in its
report at 1530 GMT. Stocks of distillates, expected to decline,
rose by 2.15 million barrels. []
U.S. crude for January <CLc1> was down 57 cents at $88.12 a
barrel at 1612 GMT while ICE Brent <LCOc1> was at $90.88, down
51 cents. U.S. crude reached a 26-month high earlier this week
of $90.76 a barrel.
"We don't have the extremes of yesterday's API number, but
on the surface this is a bearish report showing lacklustre
demand with the increase in products," said Mike Zarembski of
OptionsXpress in Chicago.
According to the EIA, U.S. crude stocks fell by 3.82 million
barrels, more than expected. Industry group the American
Petroleum Institute (API) had said on Tuesday they fell 7.3
million barrels, while distillates rose by 1.7 million barrels.
[]
Oil had recovered from losses earlier on Wednesday, despite
a stronger dollar, on optimism that U.S tax cuts will help
revive economic growth while cold weather would continue to
support demand.
"The US government extended both tax cuts from the Bush era
and the jobless benefits, which are generally both positive for
the U.S. oil demand," said James Zhang from Standard Bank.
President Barack Obama's proposal to extend tax cuts was
several times reinterpreted by the market as it aims to support
economic growth, but also unleashed fears about the longer-term
rise in U.S. debt.
The latter fears caused a spike in U.S. Treasury yields
earlier on Wednesday and boosted the dollar <.DXY>, which was
still up 0.4 percent against a basket of currencies.
A stronger dollar tends to weigh on the price of oil and
other dollar-denominated commodities.
Other analysts said the downward trend could persist if
China, the second-largest oil consumer, was to raise rates to
cool down growth.
"For the holiday period the main risk will come from China
as the odds for an interest rate hike are increasing," said
Olivier Jakob from Petromatrix.
The Organization of the Petroleum Exporting Countries,
source of more than a third of the world's oil, meets on Dec. 11
in Ecuador and is not expected to change its production policy.
OPEC two years ago announced a record production cut as
recession hit prices and demand, but its compliance with the
agreement has declined because of recovering consumption and
rising prices. []
(Reporting by Dmitry Zhdannikov and Alejandro Barbajosa;
Editing by Sue Thomas and Keiron Henderson)
