* Dollar rises back, pressures oil further
* Chinese oil production, imports up in Sept
* Coming Up: U.S. CFTC trader position data, Friday
(Updates with settlement prices, market activity)
By Gene Ramos
NEW YORK, Oct 21 (Reuters) - Oil tumbled more than 2
percent on Thursday in a sell-off sparked by the dollar's
recovery from an earlier dip, as doubts re-emerged about the
extent of potential U.S. monetary easing.
Trading has been volatile all week. The latest derailment
came 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.
Economic data showed China flush with oil, exceeding the
needs of its refineries and that weighed on crude prices.
U.S. December crude contract <CLc1>, the new front-month,
settled at $80.56, down $1.98. Crude fell as low as $80.09,
with traders watching to see if it can hold above $80.
Volume was light at 550,000 lots, almost 30 percent lower
than the 30-day average, according to preliminary Reuters
data.
"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
A trend-following momentum indicator, the Moving Average
Convergence Divergence (MACD) deepened its sell signal after
starting to turn that way on Tuesday, market sources said.
(Graphic on MACD: http://link.reuters.com/suj69p)
In London, ICE December Brent <LC0c1> ended at $81.83, down
$1.77.
"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, ECONOMIC DATA WEIGHS
The dollar's movements have keyed the market's seesaw
movement so far this week.
The U.S. dollar was up 0.4 percent against a basket of
currencies <.DXY>, after dipping 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.
Traders weighed a mix of U.S. and China economic data to
gauge potential oil demand.
In the United States, first-time jobless claims fell last
week, but suggested little improvement in the distressed labor
market.
Data showed that 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 a Reuters analysis of Chinese data.
[]
September data also showed record imports and production,
coupled with a release of commercial stockpiles, all of which
left the Chinese market awash with oil.
Earlier in the day, pressure also came from a report that
China's economic growth slowed 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, a U.S. government report showed on Wednesday. Even
though the gain was smaller than expected, the dollar's
strength pulled crude prices higher.
Distillate stocks fell and gasoline posted a surprise
build, doing little to alter fundamental weakness.
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, to help speed up the pace of economic recovery
.
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)
