* U.S. crude stocks rise less than expected
* Oil lifted by weaker dollar, rally in U.S. equities
* Coming up: US jobless claims, 8:30 a.m. EDT Thursday
(Recasts, updates prices, market activity to settlement)
By Gene Ramos
NEW YORK, Oct 20 (Reuters) - Oil rebounded nearly 3 percent
on Wednesday, the biggest daily percentage gain in more than a
month, as a weaker dollar, stronger equities and a
smaller-than-expected rise in U.S. crude stockpiles whetted
investors' risk appetite.
The gains came a day after oil futures posted their
steepest decline in more than eight months as China boosted
interest rates. Investors on Wednesday reassessed the rate hike
and deemed China's demand for oil would remain strong.
Oil gained along with metals and grains as the dollar index
<.DXY> slumped 1.3 percent. The dollar reversed the prior
session's China-inspired gains after an influential consultancy
said the Federal Reserve plans to buy $500 billion of U.S.
Treasuries over six months and leave itself room for more
buying.
U.S. crude for November delivery <CLc1> expired at the
close and settled at $81.77 a barrel, gaining $2.28, or 2.87
percent, the biggest percentage gain for a day since September
10, when prices ended up 2.96 percent.
The December contract <CLZ0> ended at $82.54, rising $2.38,
or 2.97 percent.
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Graphic on U.S. inventories:
http://link.reuters.com/gug49p
EIA status report: []
[]
Tuesday's API report: []
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Trading volume was subdued for a second day, around 685,000
lots as of 3;30 p.m. EDT (1930 GMT), well below the 30-day
average of 768,000.
ICE December Brent crude <LCOc1> rose $2.50, or 3.08
percent, to $83.60 a barrel.
U.S. equities gained more than 1 percent on stronger
quarterly earnings, an upbeat outlook from the industrial
sector and the weaker dollar. Oil investors view higher
equities as a barometer for future oil demand. []
Weekly inventory data also lent fundamental support. U.S.
stockpiles rose by only 670,0000 barrels last week, well below
analysts' forecast and short of a previously reported increase
of 2.3 million barrels in industry data. []
"The larger-than-expected draws in crude and distillates
are supportive," said Andy Lebow, broker at MF Global in New
York.
Distillate stocks were also bullish, falling more than
expected, but gasoline inventories surprised analysts with 1.2
million-barrel rise, weighing on the motor fuel market.
U.S. gasoline for November delivery <RBX0> ended at $2.0826
a gallon, up 3.43 cents, or 1.67 percent, lagging gains in
crude and heating oil.
The gasoline crack spread -- refiners' margin from
processing crude into fuel -- ended at $5.70 a barrel,
narrowing from $6.54 at the close on Tuesday. []
DOLLAR WEAKNESS, WALL STREET STRENGTH
While U.S. government inventory data was modestly
supportive, a weak dollar and strong stock market provided
greater guidance for oil and other commodity investors.
The Reuters-Jefferies CRB index <.CRB>, a global
commodities benchmark, gained 2.05 percent. On Tuesday, it fell
almost 2 percent, its biggest one-day loss in 3-1/2 months.
The greenback slid after Medley Global Advisors, an
influential consultancy, said the Federal Reserve plans to buy
$500 billion worth of U.S. Treasuries over the next six months.
[] []
The report reinforced expectations that the Fed was going
into an asset-buying scheme to boost the flagging U.S. economic
recovery, which signals better oil demand going forward.
U.S. crude reached a five-month high of $84.43 on Oct. 7 as
the dollar slumped on expectations the Fed would soon embark on
a second round of expansionary monetary measures.
A falling dollar makes oil and other dollar-denominated
commodities cheaper for holders of other currencies.
(Additional reporting by Robert Gibbons in New York; Alex
Lawler in London; Alejandro Barbajosa in Singapore; Editing by
David Gregorio)
