* U.S. crude stocks rise less than expected
* Dollar weakens, U.S. equities rise
* China rate hike impact on oil market limited - analyst
(Recasts with U.S. inventory report, updates prices)
By Alex Lawler
LONDON, Oct 20 (Reuters) - Oil jumped above $81 a barrel on
Wednesday, supported by a weaker dollar and a government report
showing crude inventories rose less than expected and
inventories of some fuels fell in the world's largest consumer.
Crude oil stocks rose by 670,0000 barrels, the U.S.
government's Energy Information Administration said, less than
analysts forecast. [] Stocks of distillates fell more than
expected, while gasoline stocks unexpectedly rose.
"The report looks moderately bullish at first sight. I think
if the market is bullish for other reasons, macro reasons, this
could add fuel to the fire," said Antoine Halff of Newedge Group
in New York.
U.S. crude for November <CLc1>, which expires later on
Wednesday, jumped $1.77 to $81.26 a barrel by 1504 GMT. Brent
crude <LCOc1> rose $1.87 to $82.97.
Oil was up earlier in the session because of the weaker
dollar and as investors reassessed China's interest rate
increase announced on Tuesday, taking the view that it would do
little to curb demand in the world's second-largest consumer.
"This will not derail the Chinese economy, so the reaction
was a bit overdone," said Carsten Fritsch, commodities analyst
at Commerzbank in Frankfurt. "Commodity prices and also equity
markets have rebounded today."
Crude in New York on Tuesday fell more than 4 percent, the
biggest one-day percentage decline since February, after China
surprised markets with its first interest rate increase in
nearly three years.
Other commodities such as gold and copper were up, while
U.S. equities gained. The Reuters-Jefferies CRB index <.CRB> was
up 1.6 percent after falling almost 2 percent on Tuesday.
WEAK DOLLAR
Oil 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.
Several Federal Reserve officials indicated on Tuesday that
the central bank will soon offer further monetary stimulus, with
one saying $100 billion a month in bond buying may be
appropriate. [].
China has been the main driver of oil demand growth so far
this year, although it still uses about half as much oil as the
United States.
The EIA report released at 1430 GMT followed that of
industry group the American Petroleum Institute (API), which
said on Tuesday crude inventories rose by 2.3 million barrels
last week.
(Additional reporting by Alejandro Barbajosa in Singapore and
Reuters energy desk in New York; editing by William Hardy)
