* U.S. EIA fuel drawdowns, economic data support oil
* Potential QE2 likely priced in, analysts caution
* Coming Up: U.S. FOMC statement at 2:15 p.m. EDT
(Recasts, updates prices and market activity)
By Gene Ramos
NEW YORK, Nov 3 (Reuters) - Oil prices rose to near $85 a
barrel on Wednesday, supported by drawdowns in U.S. fuel
inventories and upbeat economic data.
Prices were still below six-month highs hit earlier, as the
dollar remained strong against the euro before a U.S. Federal
Reserve statement scheduled at 2:15 p.m. (1815 GMT). The U.S.
central bank is expected to detail a second round of government
debt purchases to spur the fragile economic recovery.
By 1:15 p.m. EDT, U.S. crude for December delivery <CLc1>
traded at $84.70, up 80 cents, hitting $85.36, the highest
since May 4. ICE December Brent <LCOc1> also padded gains and
was up 96 cents at $86.47.
Prices also appeared supported by the results of the U.S.
mid-term elections that put Republicans back in control of the
House of Representatives and gained them seats in the Senate.
"Crude is hanging in there and investors may be thinking
oil has good chance to make a move up because of its recent
lackluster performance compared to soft commodities and metals.
Republicans are perceived as more oil friendly so the election
may be helping support," said Richard Ilczyszyn senior market
strategist at Lind-Waldock in Chicago.
U.S. FUEL INVENTORIES DOWN, ECONOMIC DATA UPBEAT
U.S. crude stockpiles rose by 2 million barrels last week,
more than forecast, the U.S. Energy Information Agency said.
[] The government data contradicted an industry report on
Tuesday showing a 4.1 million crude stock drawdown. []
Distillate stocks, shrank by 3.6 million barrels and
gasoline stocks fell by 2.7 million barrels, the EIA said. Both
decreases were much steeper than expected, the EIA said.
The dollar was up against a basket of currencies on the
latest U.S. economic reports. <.DXY>
The U.S. services sector grew more quickly than expected in
October and factory orders posted their largest gain in eight
months. Also, a private report showed U.S. private employers
added more jobs than expected in October. []
All eyes remained on Federal Reserve's policy statement,
which is expected to detail a much anticipated plan to pump
more money into the economy.
Most leading economists expect the Fed to buy between $80
billion and $100 billion worth of assets per month, according
to a Reuters poll. But estimates for how long the Fed will
print money and how much it will spend overall varied from $250
billion to $2 trillion. []
Some oil analysts have cautioned the widely anticipated
quantitative easing may have already been largely priced in.
"From a risk point of view, the risks are rather skewered
to disappointment, and could limit the upside in oil prices
today," Commerzbank oil analyst Carsten Fritsch said. "The odds
are that prices will ease after the Fed announcement unless
there is a big purchasing plan unveiled, as the bar is quite
high for expectations in the market."
"It could be a typical case of buy rumor, sell the fact,"
Credit Agricole CIB's global oil analyst Christophe Barret
said. "It's very possible you will have some sell off in
prices."
(Additional reporting by Robert Gibbons in New York, Zaida
Espana in London, and Alejandro Barbajosa in Singapore; Editing
by David Gregorio)
