* Chinese economy grew 9.6 pct in third quarter
* Oil to approach 5-month high -Technicals []
* Coming Up: U.S. initial jobless claims; 1230 GMT
(Adds China implied oil demand, port closure, analyst comment)
By Alejandro Barbajosa
SINGAPORE, Oct 21 (Reuters) - Oil declined as the dollar
strengthened on Thursday after U.S. Treasury Secretary Timothy
Geithner said there was no deliberate policy to devalue the
currency, while China's economy slowed in the third quarter.
Front-month U.S. crude <CLc1>, from Thursday the December
contract following November's expiry a day earlier, fell 57
cents to $81.97 a barrel by 0557 GMT, after rising almost 3
percent on Wednesday. ICE Brent <LCOc1> dropped 45 cents to
$83.15.
The dollar, the yen and the euro are "roughly in
alignment," Geithner told the Wall Street Journal in an
interview, suggesting there was no need for the greenback to
sink further.
China's growth receded in the third quarter and inflation
edged just a touch higher, showing the economy was strong but
far from overheating and suggesting that an interest rate rise
this week, the first in almost three years, may be enough for
now.
"The market is uncertain about how a tightening policy in
China will impact on growth," said David Taylor, an analyst at
CMC Markets in Sydney. "The China growth story is crucial to
the sustainability of the Asian region."
"From an energy consumption point of view, China is the
world's largest energy consumer and there is nothing to suggest
that it is pulling back from that, so it's supportive."
China's economic growth in the July-September quarter was a
touch stronger than expected at 9.6 percent, down from 10.3
percent in the second quarter, while consumer inflation hit a
23-month high of 3.6 percent in September, in line with market
projections. []
RISK AVERSION
Still, for some, the numbers constituted a downside
surprise after recent market chatter that growth and inflation
had been much stronger, prompting the rate increase.
"We are seeing some risk aversion from the higher
inflation," Taylor said. "When you see risk aversion the dollar
strengthens and that puts pressure on commodities."
Oil swayed from gains to losses early on Thursday as the
dollar strengthened from a 15-year low against the yen on
speculation about the size and timing of an expected stimulus
to the U.S. economy. The greenback gained more than 0.1 percent
against a basket of currencies. <.DXY>
A report from influential consultancy Medley Global
Advisors said the Fed planned to buy $500 billion of Treasuries
over six months and leave itself room for more buying.
Oil on Wednesday posted its biggest daily percentage gain
in more than a month, after a slump of more than 4 percent on
Tuesday, when China raised interest rates. Prices reached a
five-month high of $84.43 on Oct. 7.
China's implied oil demand in September rose 6.2 percent
from a year earlier to about 8.68 million barrels per day
(bpd), Reuters calculations based on preliminary official
figures showed on Thursday, just short of a record-high 8.9
million bpd in June.
The growth rate, which eased off the double-digit base seen
during most of the first half of 2010, came on top of a strong
base in September 2009, when demand rose at the fastest pace in
three years.
The country's domestic crude production jumped 9 percent to
a record 4.18 million bpd in September.
"China, in my view, are certainly moving towards being more
self-contained," Taylor said.
"They will be producing and consuming more energy, and they
will develop technology, aiming to decouple their risk away
from external suppliers."
Several key oil and container ports in southern China were
closed on Thursday ahead of Typhoon Megi, stopping bunker fuel
deliveries and forcing tankers to evacuate to calmer waters,
industry sources said. []
U.S. crude oil inventories rose last week by a
smaller-than-expected 667,000 barrels as imports increased, a
weekly report from the federal Energy Information
Administration showed on Wednesday. []
Distillate stocks were also bullish, falling more than
expected, but gasoline inventories surprised analysts with a
rise of 1.2 million barrels, weighing on the motor fuel
market.
