* U.S. crude stocks unexpected fall by 7.29 million bbls
* China Premier Wen prepares steps to tame price rises
* Coming Up: U.S. weekly jobless claims, Thursday
(Recasts, updates prices and market activity, adds new
byline and changes dateline, previously LONDON)
By Gene Ramos
NEW YORK, Nov 17 (Reuters) - Oil fell more than 2 percent
to below $81 a barrel on Wednesday as worries persisted that
China would raise interest rates to cool down inflation,
curbing demand from the world's biggest growth engine.
U.S. government data showing an unexpectedly heavy drawdown
in domestic crude stocks last week failed to stem a fourth day
of decline in energy markets.
By 12:58 p.m. EDT (1758 GMT), U.S. crude for December
delivery <CLc1> was down $1.60 at $80.74 a barrel, having
dropped to a session low of $80.55, the lowest in more than two
weeks.
U.S. crude prices have fallen about 7.7 percent in four
sessions, the biggest percentage loss since a four-day decline
to July 2. Prices are down from the two-year high of $88.63 hit
on Thursday.
ICE Brent January crude <LCOc1> fell $1.02 to $83.71.
U.S. crude stockpiles fell 7.3 million barrels last week as
imports dropped and refinery demand increased as more
production units restarted after seasonal maintenance, data
from the U.S. Energy Information Administration showed.
[]
The data also showed larger-than-expected drawdowns in
distillate supplies, which include heating oil and diesel fuel,
and in gasoline inventories.
Even so, reaction to the bullish government report was
muted as the industry group American Petroleum Institute
reported late on Tuesday a 7.7 million barrel drop in domestic
crude stocks last week.
DOLLAR SIDESTEPPED
Oil markets also shrugged off signals from the dollar,
which fell against the euro and a basket of currencies <.DXY>
as there appeared to be no clear-cut solution available to
resolve Ireland's debt crisis in the euro zone. []
In the usual correlation pattern, a lower value of the
dollar sparks more risk-taking in the oil markets.
"After failing at Tuesday's close, bulls are shedding
length and that is why crude hasn't received much support from
the dollar's reversal today even with the inventory slide,"
said Stephen Schork, president at the Schork Group in
Villanova, Pennsylvania.
Commodities and global markets have been hard hit in recent
sessions on concerns involving China, the world's largest
energy consumer. China has overtaken the United States to
become the world's largest energy consumer.
Chinese Premier Wen Jiabao said his government was
preparing steps to tame rising prices, the official Xinhua news
agency reported late on Tuesday. []
The tendency of China's central bank to raise interest
rates around the 20th day of the month makes this coming Friday
a "sensitive window" for a rate rise, an official newspaper
said on Wednesday, citing unnamed analysts.
U.S. CPI, IRELAND
Further pressure came as the U.S. consumer index increased
by a smaller-than-expected 0.2 percent in October.
[]
The increase in the year-on-year core rate was the smallest
on record, data showed, further supporting the Federal
Reserve's decision to ease monetary policy through a gradual
but massive purchase of Treasury bonds.
Irish debt problems continued to roil world markets, even
though Ireland committed itself on Wednesday to work with a
European Union-IMF mission on urgent steps to help its stricken
banking sector, a process that could lead to a bailout despite
reluctance in Dublin.
A team from the European Commission, the International
Monetary Fund and European Central Bank will travel to Ireland
on Thursday to examine what measures may be needed if Dublin
decides to seek aid, euro zone finance ministers said.
(Additional reporting by Robert Gibbons in New York; Ikuko
Kurahone and Dmitry Zhannikov in London; and Alejandro
Barbajosa in Singapore; editing by Marguerita Choy)
