* Dollar rises back, pressures oil further
* Chinese oil production, imports up in Sept
* Coming Up: U.S. CFTC trader position data, Friday
(Recasts, updates prices and market activity, new byline,
changes dateline, previously LONDON)
By Gene Ramos
NEW YORK, Oct 21 (Reuters) - Oil slumped more than 2
percent on Thursday in a sell-off sparked by the dollar's
recovery from an earlier dip, as doubts resurfaced about the
extent of potential U.S. monetary easing.
The latest derailment comes after after U.S. crude oil
posted its biggest daily percentage gain in more than a month
on Wednesday, following a 4 percent dive on Tuesday, when China
raised its interest rates.
At 1:50 p.m. EDT (1750 GMT), U.S. December crude contract
<CLc1> the new front-month, fell $2.17 to $80.37 a barrel. U.S.
crude reached a five-month high of $84.43 on Oct. 7.
"Some stops were triggered on the way down and there may
be a perception change and people thinking the dollar may be
oversold and that the Fed may not be able to deliver as much
quantitative easing and it may be priced in," said Richard
Ilczyszyn senior market strategist at Lind-Waldock in Chicago.
Sell stops were triggered at $81.30 and later accelerated
as $80.80 was hit before midday.
"Oil is trapped in this $76-to-$84 range and is very
receptive to currency moves," Ilczyszyn said.
In London, ICE December Brent <LC0c1> dropped $1.90 to
$81.70.
"The oil market appears exhausted after two very volatile
trading days and there is uncertainty about the price
direction." said Gene McGillian, analyst, Tradition Energy,
Stamford, Connecticut.
DOLLAR REBOUNDS IN SEESAW TRADING
The dollar, whose movement in the past two days dictated
the direction of commodities prices, seesawed.
At 1:40 p.m. EDT, the U.S. dollar was up 0.29 percent
against a basket of currencies <.DXY>, after moving down
earlier. Much earlier, the greenback rose after U.S. Treasury
Secretary Tim Geithner said in Tokyo that there was no need for
the dollar to sink further against the euro and the yen.
A stronger dollar makes dollar-denominated oil more
expensive to other currency holders.
A record influx of crude oil into China last month far
surpassed the needs of the country's refining sector, leaving
an apparent surplus of 1.5 million barrels per day, according
to Reuters analysis of Chinese data. []
September data showed record imports and production,
coupled with a release of commercial stockpiles, all of which
left the Chinese market flush with oil.
Lending some downside pressure earlier was data showing
that China's economic growth slowed a little in the
July-September quarter, growing at 9.6 percent year-on-year,
down from 10.3 percent in the second quarter.
U.S. crude oil inventories rose last week by 667,000
barrels, and even though smaller than expected, was overridden
by the dollar's strength that pulled crude prices higher.
Distillate stocks fell and gasoline posted a surprise
build, but the overall fundamental weakness remained.
Oil prices have found support at around $80 in recent
sessions on expectations that the U.S. Federal Reserve would
launch another round of monetary easing, probably as early as
next month.
In other news, France's 12 oil refineries remained blocked
on Thursday with fuel supplies from them still cut off, as
workers continued strikes to protest against the reform of
France's pension system, the CGT union said.
(Additional reporting by Robert Gibbons in New York;
Christopher Johnson and Isabel Coles in London; and Alejandro
Barbajosa in Singapore; Editing by Lisa Shumaker)
