* China rate hike impact on oil market limited - analyst
* API says U.S. fuel inventories fell
* Coming Up: U.S. EIA oil inventory report; 1430 GMT
(Previous SINGAPORE, updates prices)
LONDON, Oct 20 (Reuters) - Oil rose above $80 a barrel on
Wednesday, supported by signs that U.S. fuel stockpiles are
falling and as some investors took the view that an interest
rate increase by China would do little to dampen its oil use.
Fuel stockpiles in the United States fell last week, the
American Petroleum Institute (API) said on Tuesday. The U.S.
government's Energy Information Administration reports its
inventory figures later on Wednesday. []
U.S. crude for November <CLc1>, which expires on Wednesday,
gained $1.09 to $80.58 a barrel by 0840 GMT. Brent crude <LCOc1>
rose by $1.16 to $82.26.
Oil in New York on Tuesday fell more than 4 percent, the
biggest one-day percentage decline since February, after China
surprised markets by raising interest rates for the first time
in nearly three years.
"It seems to me there was a very knee-jerk reaction to the
China move across all commodities, and now people are starting
to step back and think about what it actually means for Chinese
growth," said Yingxi Yu, a Singapore-based commodities analyst
with Barclays Capital.
"The answer is probably not much. The actual impact of this
rate hike might be limited, on the overall growth story in
China. I don't think fundamentally it changes the demand story."
The rate rise hit sentiment across commodities, sending down
the Reuters-Jefferies CRB index <.CRB> by almost 2 percent to
its biggest one-day drop in more than three months.
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For a graphic on China's inflation and rate rises click:
http://link.reuters.com/rem39p
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WEAK DOLLAR
Oil also gained support from a weak dollar, which dipped
against a basket of currencies. [] A falling dollar makes
oil and other dollar-denominated commodities cheaper for holders
of other currencies.
U.S. crude reached a five-month high above $84 on Oct. 7 as
expectations the Federal Reserve would this year embark on a
second round of expansionary monetary measures to boost growth
weighed on the dollar.
China, the world's second-largest oil user, has been the
main driver of growth in crude demand so far this year, while an
inventory overhang in top consumer the United States has limited
gains.
In a move that could curb demand, China will raise retail
fuel prices effective Thursday, a source said, in its first
increase since April. []
U.S. crude inventories rose by a greater-than-expected 2.3
million barrels last week, the API said on Tuesday.
But stocks of distillates, including diesel and heating oil,
fell by 854,000 barrels, while gasoline stocks fell by 83,000
barrels. Refinery utilization rose 0.8 percentage points.
(Reporting by Alejandro Barbajosa in Singapore and Alex Lawler
in London; editing by James Jukwey)
