* China crude imports slip in July, weigh on oil price
* Fed to buy gov't debt, offers somber economy view
* Coming up: EIA oil inventory data, Wed 10:30 a.m. EDT
(Updates with Brent crude settlement price, market activity,
API inventory data)
By Robert Gibbons
NEW YORK, Aug 10 (Reuters) - Oil futures prices fell on
Tuesday, but pared losses in late trade after the Federal
Reserve said it would keep interest rates low and take other
steps to cut borrowing costs and encourage economic recovery.
Earlier, oil had been slipped after data showed China's
crude oil imports slowed in July and as the dollar rose.
But the dollar fell against the yen and erased gains
against the euro <EUR=> after the Federal Reserve unveiled
plans to boost a flagging economy by reinvesting money from
maturing mortgage bonds into government debt.
This marked a policy shift for the Fed, which just months
ago had been debating how to start winding down its various
monetary stimulus programs. For more on the Fed announcement,
please see [].
The prospect of continued cheap money helped U.S. stocks,
which ended down on the day but well above session lows. []
U.S. crude for September <CLc1> delivery fell $1.23, or
1.51 percent, to settle at $80.25 a barrel, trading from $79.20
to $81.62.
Front-month ICE Brent crude <LCOc1> fell $1.39 to settle at
$79.60 a barrel.
"The oil markets appear to have found some support on the
Fed announcement that it will continue to keep interest rates
exceptionally low for an extended period," said Gene McGillian,
analyst, Tradition Energy, Stamford, Connecticut.
"Low interest rates attract money to commodities. The
dollar paring its gains allowed crude futures to pare losses,"
CHINESE CRUDE OIL IMPORTS SLOW
Along with the dollar's strength, oil futures and equities
markets were pressured early by news of reduced Chinese crude
oil imports in July.
China imported 19 million tonnes, or 4.47 million barrels,
of crude per day in July, down 17.5 percent from June's record
5.4 million bpd, official data showed. []
In the same month, overall imports rose 22.7 percent, well
short of forecasts, helping to drive down Chinese share prices
<> by 2.9 percent. []
Demand from China has been a key supportive factor for oil
prices as consumption in developed markets has stalled.
In another signal of weak demand, U.S. weekly retail
gasoline demand fell 1.6 percent in the week ending Aug. 6 from
the previous week, according to a report from MasterCard
Advisors. Year-on-year, demand was up a tepid 0.5 percent.
[]
A more supportive outlook came from the U.S. Energy
Information Administration in a monthly report that modestly
boosted global oil demand growth expectations for 2010 and
2011, with developing countries driving consumption despite a
slower outlook for the U.S. economy. []
OIL INVENTORY REPORTS
After the Fed decision, oil traders focused on the week's
oil inventory reports, starting with the American Petroleum
Institute's report released on Tuesday after oil prices had
settled.
The API said crude stocks fell 2.2 million barrels in the
week to August 6, more than analysts had expected. []
Gasoline stocks fell 1.5 million barrels and distillate
stocks, which include diesel fuel and heating oil, rose 2.3
million barrels, the API said.
Ahead of the API report, a Reuters survey of analysts on
Tuesday yielded a forecast for crude oil stocks to have fallen
1.9 million barrels last week. []
Gasoline stockpiles were expected to be up slightly, by
200,000 barrels, with distillate stocks expected to be up 1.4
million barrels.
The more closely watched inventory report from the EIA is
set to be released at 10:30 a.m. (1430 GMT) on Wednesday.
(Additional reporting by Gene Ramos in New York, Barbara Lewis
in London and Florence Tan in Singapore; Editing by David
Gregorio)
