* China Premier Wen prepares steps to tame price rises
* U.S. crude stocks unexpected fall by 7.3 million bbls
* Coming Up: U.S. weekly jobless claims, Thursday
(Updates with settlement prices and market activity)
By Gene Ramos
NEW YORK, Nov 17 (Reuters) - Oil prices slumped to a
four-week low 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 inventories last week failed to stem a fourth
day of decline in energy markets.
U.S. crude for December delivery <CLc1> settled $1.90
lower, or 2.31 percent, at $80.44 a barrel, the lowest for a
front-month contract since Oct. 19.
Four-day losses grew to $7.37, or 8.39 percent, the biggest
percentage drop since the four days to May 7, when prices fell
12.86 percent. Prices have skidded from a two-year high of
$88.63 hit on Thursday.
ICE Brent January crude <LCOc1> fell $1.45, or 1.71
percent, to $83.28.
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.
Reaction to the bullish report was muted as the data from
industry group American Petroleum Institute released on Tuesday
showed a 7.7 million barrel drop in crude stocks.[]
DOLLAR SIDESTEPPED
Oil markets also shrugged off signals from the dollar,
which fell against the euro and a basket of currencies amid
talk that Ireland may soon get help needed to fix its sovereign
debt problems. []
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. []
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 hit hard 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.
"Until the Chinese interest rate question and some key
portions of the European sovereign debt issues are better
clarified, this global economic uncertainty will keep
speculative longs across the oil complex on the defensive,"
said Jim Ritterbusch, president of Ritterbusch & Associates in
Galena, Illinois.
U.S. CPI, QE2, IRELAND
U.S. core consumer inflation rose by a 0.2 percent in
October, smaller than expected and a record low, further
supporting the U.S. Federal Reserve's decision to ease monetary
policy through a massive purchase of Treasury bonds.
The anticipation and announcement of the Fed's so-called
quantitative easing decision had helped in oil's most recent
rally, on hopes that the move would help speed the sluggish
pace of U.S. economic recovery.
But the just-concluded midterm elections that gave more
seats to Republicans in the U.S. Congress have emboldened some
GOP legislators to question the wisdom of the bond purchases,
saying it may imperil the dollar and spawn inflation.
[]
(Additional reporting by Robert Gibbons in New York; Ikuko
Kurahone and Dmitry Zhannikov in London; and Alejandro
Barbajosa in Singapore; Editing by Marguerita Choy)
