* OPEC seen keeping output targets steady at Wednesday talks
* China's expected policy tightening weighs
* COMING UP: Fed benchmark rate decision at 1815 GMT
* COMING UP: American Petroleum Institute report at 2030 GMT
(Recasts, updates prices, previous SINGAPORE)
By Emma Farge
LONDON, March 16 (Reuters) - Oil held below $80 a barrel in
a cautious market ahead of an OPEC meeting and expected monetary
policy moves from the world's top two oil consumers, the United
States and China.
Oil prices slid nearly 2 percent on Monday, falling below
$80 for the first time since March 4 on the back of dollar gains
and fears that a 16-month high in consumer inflation in China
might lead to further tightening as early as this week.
U.S. crude prices for April <CLc1> rose 15 cents to $79.95 a
barrel by 1022 GMT, having fallen over $3 since touching a
two-month high on 11 March. ICE Brent futures <LC0c1> fell 13
cents to $78.02 a barrel by the same time.
China has already tightened reserve requirements twice this
year, with each move hitting commodity markets worried about
slower demand.
The U.S. Federal Reserve is set to release a statement later
on Tuesday and is expected to reiterate its pledge to keep rates
low for an extended period. []
"Tuesday may shape up to be another down day for energy,
since participants may not want to get too long ahead of the Fed
announcement later in the day," said MF Global analyst Edward
Meir, adding any positive comments from the meeting could boost
the dollar.
A stronger dollar tends to push oil prices lower as it makes
it more expensive for buyers holding other currencies.
The dollar was steady against the euro on Tuesday. []
SUPPLY OUTLOOK
OPEC is expected to keep output unchanged in its Wednesday
meeting in Vienna, with Saudi Arabia's oil minister saying the
producers' group may not need to adjust output policy this year
if the oil market remains stable. []
"The market is in balance, the price is great, inventories
are coming down so why should we do anything?" Ali al-Naimi said
on Monday, echoing comments from OPEC members Iran and Qatar.
He answered "yes" when asked by reporters if he was happy
with compliance.
But for some analysts, no decision could be seen as a
bearish input for the oil market given falling compliance.
In February, OPEC delivered just 53 percent of pledged
output curbs it agreed in late 2008, down from 81 percent a year
ago.
"...The perceptions of an existing supply glut generated by
a poor compliance record will likely be reinforced in the
aftermath of the session," said Meir.
A report from the American Petroleum Institute due at 2030
GMT on Tuesday will provide an update on U.S. inventories and is
expected to show that crude stocks rose for the seventh straight
session last week.
The average forecast showed a 900,000 barrel increase in
crude supplies, according to a preliminary Reuters poll of
analysts. []
Weekly U.S. chain store sales due at 1145 GMT and U.S.
retail sales at 1255 GMT could also steer the market later on
Tuesday, analysts said.
The threat of future attacks on the oil industry in Nigeria
may be curbing oil losses after militants detonated two car
bombs outside a government building on Monday. []
(Additional reporting by Michael Urquhart in Singapore; editing
by James Jukwey)
