Oil rises above $82 ahead of OPEC meet, inventory data

                                

                                
 * Dollar at one-month low on Fed decision to keep rates low
                                
 * OPEC seen keeping output targets steady at Wed talks
                                
 * U.S. crude stocks rose less than expected last wk: API  
 * Coming up: EIA crude stocks data; 1430 GMT
                                
 By Fayen Wong
                                
 PERTH, March 17 (Reuters) - Oil prices extended overnight
gains and rose above $82 a barrel on Wednesday, supported by a
weaker dollar and expectations that producer group OPEC will
keep oil output cuts in place at a meeting later in the day.
                                
 An industry report that showed a steep fall in U.S.
gasoline stockpiles and smaller-than-expected increase in crude
inventories also helped buoy investor sentiments.
                                
 U.S. crude for April delivery <CLc1> was up 41 cents at
$82.11 a barrel by 0046 GMT, after settling up $1.90 at $81.70
on Tuesday. London Brent crude <LCOc1> rose 42 cents to $80.95
a barrel.
                                
 "Oil prices continue to be supported by the soft tone of
the U.S. dollar, while the industry data showing a fall in
gasoline is also somewhat supportive," said David Moore, an oil
analyst at the Commonwealth Bank of Australia.
                                
 The U.S. dollar hovered near one-month lows against a
basket of currencies on Wednesday as investors cut long
positions after the U.S. central bank retained its dovish bias.
[USD/]
                                
 "As for OPEC, expectations that it will leave production
targets unchanged are now well factored in prices, so the
market will place focus more on the weekly U.S. inventory
report instead," Moore added.
                                
 Oil demand is picking up and that could mean OPEC does not
need to take any further action on supply this year, the
group's biggest producer, Saudi Arabia, said, as ministers
prepared to rubber stamp existing outpaced targets.
                                
 "We have been sailing very well and we will continue to
sail very well," Saudi Arabian Oil Minister Ali al-Naimi told
reporters a day ahead of the grouping's meeting in Vienna on
Wednesday, as other members voiced concern OPEC was pumping too
much oil. [ID:nLDE62F0VT]
                                
 U.S. crude oil stockpiles rose much less than expected last
week, posting gains of 403,000 barrels in the week to March 12,
versus analysts' forecast of a 1.1 million barrel build,
according to weekly data from the American Petroleum Institute
(API) on Tuesday. [nN16111847][EIA/]
                                
 Gasoline inventories fell by 3.7 million barrels, the API
data showed, after analysts polled by Reuters forecast an
800,000 barrel drawdown.
                                
 The U.S. Energy Information Administration's report is set
for release on Wednesday at 1430 GMT. [ID:nN16652280]
                                
 Crude oil prices jumped 2.4 percent on Tuesday in their
highest daily percentage gain in a month -- as the dollar
weakened after the U.S. Federal Reserve renewed its pledge to
keep interest rates near zero for an "extended period".
[ID:nN16251615]
                                
 Loose Fed monetary policy can spur investment flows into
oil and other commodities as investors seek richer returns.
                                
 The Fed also pointed to increased momentum in the economy's
recovery, and that, coupled with strength in chipmaker Intel
<INTC.O>, helped push U.S. stocks to a fresh 17-month high.
[ID:nN16251615]
                                
 Analysts at Barclays Capital said oil prices have
consolidated at higher levels and they expect prices to
continue to gradually "grind higher," driven by an overall
supportive flow of fundamental data and steady improvement in
market balances.
 (Editing by Clarence Fernandez)