* API says U.S. crude inventories fall 7.4 million barrels
* Chinese crude imports fall below 4 million bpd in October
* Technicals suggest oil to fall towards $85 []
* Coming Up: U.S. EIA oil inventory report; 1530 GMT
(Updates throughout, changes dateline from SINGAPORE)
By Christopher Johnson
LONDON, Nov 10 (Reuters) - Oil climbed towards $87 per
barrel on Wednesday as news of a big drop in U.S. crude oil
inventories outweighed the impact of a stronger dollar and a
fall in Chinese oil imports.
The American Petroleum Institute (API) said late on Tuesday
that U.S. crude stockpiles dropped a surprise 7.4 million
barrels last week, defying expectations of a 1.4 million-barrel
build. []
The impact of the rise in U.S. stocks was blunted by a small
rise in the value of the dollar, which gained about 0.25 percent
against a basket of currencies <.DXY>, reducing the appeal of
commodities as an investment.
U.S. crude futures for December <CLc1> rose 20 cents to
$86.92 by 0930 GMT, after reaching $87.63 on Tuesday, its
highest since October 2008. ICE Brent <LCOc1> rose 23 cents to
$88.56 per barrel.
"The API crude data is supportive for oil and significant
because the figures add up," said Christophe Barret, global oil
analyst at Credit Agricole in London.
"Crude stocks dropped because U.S. imports fell and refinery
runs increased to take advantage of a shortage of products in
Europe during the French refinery strikes. But the strikes are
over now, so it is only a temporary support for prices."
Data showing a substantial fall in Chinese crude imports in
October helped limit oil's gains, traders said.
CHINESE IMPORTS SLUMP
China's crude imports fell 30 percent in October to 16.39
million tonnes, the lowest in at least 18 months, or 3.86
million barrels per day (bpd), from a record 5.67 million bpd in
September, customs data showed on Wednesday. []
Analysts warned against reading too much into a single set
of trade data from China, the world's second-largest oil user.
The average of Chinese crude imports for September and
October, at 19.84 million tonnes, is roughly in line with totals
seen for the first eight months of the year at 19.73 million,
suggesting re-stocking took place in the month before October's
week-long National Day celebrations.
Tuesday's API industry report pointed to tightening fuel
supplies in the United States. Stockpiles of distillates,
including heating oil and diesel, dropped by 4 million barrels
in the week to Nov. 5, while gasoline inventories slipped 3.4
million barrels.
Markets await confirmation of this declining trend across
fuel categories from the U.S. Energy Information Administration,
set to release government data on inventories and demand on
Wednesday at 1530 GMT.
U.S. crude inventories were forecast to have increased by
1.4 million barrels last week, a Reuters survey showed, while
stocks of distillates including heating oil and diesel were
expected to have fallen 1.9 million barrels. Gasoline stockpiles
were forecast to have dropped 800,000 barrels. []
The EIA raised its 2011 world oil demand forecast by 33,000
barrels per day, to 87.77 million bpd, from its previous monthly
forecast, and now sees a year-on-year rise of 1.44 million bpd.
[]
The International Energy Agency, which advises 28
industrialised countries, has raised its oil price forecasts,
citing growing supply uncertainty.
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For a graphic of the IEA's oil price assumptions, click:
http://r.reuters.com/hyn54q
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(Additional reporting by Clarence Fernandez; editing by Alison
Birrane)
