(Repeats with no changes to text)
* U.S. refinery runs to drop during maintenance
* Dollar strengthens to 4-month high vs. euro
* U.S. inventory reports due out day later than usual
(Adds comments on China credit, updates prices)
By Alejandro Barbajosa
SINGAPORE, Jan 20 (Reuters) - Oil extended losses towards
$78 a barrel on Wednesday on tighter credit policy in China, a
stronger dollar and expectations that U.S. refiners processed
less crude.
Chinese banking authorities have instructed some major
banks to stop new lending for the rest of January after loan
growth surged in the first few weeks of the year, official
media and banking sources said on Wednesday. []
"I expect China to continue to tighten its monetary policy
over the next six months," said Clarence Chu, an energy trader
at Hudson Capital Energy in Singapore.
"People expect less cash to be flowing around, so today's
news would also have a bearish impact on the market in the
short run."
Separately, U.S. crude inventories likely rose for a third
straight week last week as imports increased and refinery
utilisation fell with the start of the maintenance season, a
preliminary Reuters poll of analysts showed.
U.S. crude for February delivery <CLc1> fell as much as 65
cents to $78.37 a barrel and was trading down 63 cents at 0500
GMT on its last day as the front-month NYMEX contract. March
crude <CLc2> declined 60 cents to $78.72. London Brent <LCOc1>
for March fell 59 cents to $77.04.
A stronger dollar also weighed on crude prices. The euro
fell to its lowest level in five months against sterling and
its weakest level in four months against the dollar on
Wednesday after triggering stop losses. []
"The inverse relation between the dollar and crude has been
pretty strong during Asian trading hours," Chu said.
On Tuesday, prices hit their lowest this year at $76.76 for
front-month U.S. crude futures before rising to above $79. They
had touched a 15-month high near $84 on Jan. 11.
RISING STOCKPILES
U.S. inventory reports this week are due out a day later
than usual because of Monday's Martin Luther King Jr. holiday.
The American Petroleum Institute will issue its industry report
later on Wednesday at 2130 GMT. The Energy Information
Administration will publish government data on Thursday at 1600
GMT.
U.S. crude stockpiles were expected to have gained 2.5
million barrels on average the week ended Jan. 15, a survey of
eight analysts showed.
Distillate stocks were projected up 400,000 barrels, with
heating oil demand expected to have fallen amid moderating
winter temperatures in the U.S. Northeast. Gasoline stocks
probably rose 1.9 million barrels.
The country's refinery utilization was forecast to have
fallen 0.3 percentage point to 81.0 percent of capacity.
[]
"If refinery runs go up, it means that they are turning
that crude into products, but that is not happening," said
Hudson Capital's Chu. "Refinery runs are actually down, so they
are storing the crude somewhere."
Some U.S. refineries have begun their first-quarter
maintenance, with the goal of retooling for gasoline production
ahead of the summer driving season.
MONETARY POLICY
China's move to limit credit could be interpreted as
further tightening of Chinese monetary policy. Higher reserve
requirements for Chinese banks last week pulled commodity
prices lower as traders anticipated the phasing out of economic
stimulus measures.
Still, Chinese industrial production probably grew at its
fastest pace in almost four years, jumping by 20 percent in the
year to December compared to a reading of 19.2 percent in
November. China's December economic indicators will be
published on Thursday at 0200 GMT. []
(Editing by Ed Lane)
