* Dollar hits highest in 2 mths vs yen
* OPEC ministers expected to keep supply curbs unchanged
* China's Nov implied oil demand up 18.7 pct on year
(Adds OPEC meeting, updates prices)
By Judy Hua
SINGAPORE, Dec 22 (Reuters) - Oil edged up on Tuesday ahead
of an OPEC meeting, with the firm dollar countering an expected
fall in crude and distillate inventories in the United States
along with the sustained strong demand in China.
The U.S. currency rose to a two month-high versus the yen,
as investors unwound short dollar positions heading into the
year-end, but it eased against a currency basket after nearing
a high of more than three months on Monday. [] <.DXY>
Crude for the new front-month February contract <CLc1> rose
27 cents to $73.99 a barrel by 0755 GMT. The January contract
expired on Monday down 89 cents at $72.47, pressured by the
stronger dollar.
London Brent crude for February <LCOc1> rose 21 cents to
$73.20.
"Trading volumes will be decreased because of the Christmas
holidays and OPEC is expected to keep its quota unchanged,
therefore there is no specific factors which can drive this
market up and down," said Ken Hasegawa, a commodity derivatives
sales manager at broker Newedge in Tokyo.
"Currency is the most important factor at the moment to
move the crude market," he said, adding that prices are
expected to move within the range of $72 and $75.
U.S. crude stocks were expected to have fallen by 1.6
million barrels last week, as refiners drew down inventories
for year-end tax issues, a drop which would follow declines of
more than 3 million barrels in the previous two weeks, an
initial Reuters poll found. []
Distillate stocks, which include heating oil and diesel,
were expected to be down 2.1 million barrels as last week's
cold and snow bolsted heating oil demand in the U.S. Northeast,
the nation's largest heating oil market, the poll showed ahead
of the release of the weekly American Petroleum Institute
report later in the day.
Data from the government Energy Information Agency (EIA)
will be released on Wednesday.
COLD SNAP
"Cold weather is a supportive factor, but not enough to
make a huge long position at the moment. The inventory is high
anyway," Hasegawa said, referring to the 98 million barrels of
distillates stored on ships by the end of November, according
to International Energy Agency data.
Despite the expected fall in U.S. distillates stocks last
week, heating fuel stockpiles are still above year-ago levels
and more than 3 trillion cubic feet of natural gas are in
store.
Colder-than-normal weather is expected across much of the
United States from January to March, private forecaster WSI
said in its latest winter outlook on Monday. []
The current El Nino event and the cold north Pacific will
contribute to the unusually severe winterr, which will help
boost gas and power demand in the large consuming regions,
especially in February and March, the forecaster said.
For Factbox on U.S. winter weather forecasts, click
[]
On the supply front, OPEC President Jose Botelho de
Vasconcelos told Reuters oil prices near $75 a barrel were
favourable and there was no need for OPEC to change output
targets at its Tuesday meeting in Angola. []
Officials from the producer group had said OPEC looked
likely to call for improved compliance with existing curbs,
with the Secetary-General saying it would want compliance to be
more than 75 percent. []
China is also boosting exports to an already well supplied
market with gasoline up 71 percent in November from a year ago,
while diesel rose 12 times to 390,000 tonnes, as refiners
cranked up throughput to new highs, prompting supplies to grow
swifter than consumption, which has shown firm recovery in
recent months. []
Apparent oil demand in the world's second-largest energy
consumer, rose by a record annual rate of 18.7 percent in
November from a year earlier, though the brisk growth is partly
due to a low base last year, Reuters calculations based on
official data showed. []
(Editing by Ramthan Hussain)
