SINGAPORE, Oct 20 (Reuters) - Oil was steady on Wednesday
after China's surprise interest rate increase a day earlier
knocked down prices by more than 4 percent to below $80 a
barrel for the first time this month.
U.S. crude for November <CLc1>, the front-month contract
until it expires by the end of trading on Wednesday, added 20
cents to $79.69 a barrel by 0038 GMT. The more liquid December
contract, which will become the front month from Thursday,
gained just 8 cents to $80.24.
ICE Brent for December <LCOc1> was unchanged at $81.10.
China, the world's second-largest oil user, has so far this
year been the main driver of growth in the crude market as
imports soar, while an inventory overhang in top consumer the
United States has dragged the market lower.
FUNDAMENTALS
* U.S. crude inventories rose by a greater-than-expected
2.3 million barrels last week while product stocks fell despite
an increase in refinery operations, the American Petroleum
Institute (API) said on Tuesday. A Reuters survey indicated
stockpiles would rise by 1.9 million barrels. [] []
* Stocks of distillate fuel, including diesel and heating
oil fell by 854,000 barrels, roughly in line with expectations,
while gasoline stocks fell by just 83,000 barrels, compared
with analysts' forecasts for a 1.3-million barrel drop.
* Government data from the U.S. Energy Information
Administration (EIA) will follow at 1430 GMT on Wednesday.
* China's central bank raised interest rates for the first
time in nearly three years, a move that reflects concern about
resurgent asset prices and could mark the start of a more
aggressive phase of monetary tightening in the world's
fastest-growing major economy. []
* If there was ever any doubt about China's role in driving
the stuttering global economic recovery, the impact was felt by
markets across the board. Commodities prices tumbled, stocks
turned negative in Europe and the dollar jumped.
[] []
MARKETS NEWS
* Wall Street also was hit by fears that U.S. banks might
be on the hook for billions of dollars in souring mortgage
bonds, driving stocks to post their biggest loss in two months.
[]
* Japan's Nikkei average opened down 1.5 percent on
Wednesday, reflecting the sharp fall in U.S. shares. []
* The dollar held firm in early Asian dealings on Wednesday
with investors across the region poised to cut short positions
a day after the surprise interest rate increase in China
spurred the market to lower risk exposure. []
DATA/EVENTS
* The following data is expected on Wednesday:
- 0300 Japan PAJ weekly oil inventory data Oct 15
[] - 1100 U.S. Mortgage index Weekly <USMGM=ECI>
- 1430 U.S. EIA weekly oil stocks Oct 15 <USOILC=ECI>
- 1800 U.S. Fed Beige book
RELATED NEWS
* China's surprise interest rate rise on Tuesday is taking
the wind out of surging global commodities prices but the move
will be supportive in the longer term, market participants
said. []
(Reporting by Alejandro Barbajosa; Editing by Clarence
Fernandez)
