* Commodities, equities lower after China's reserve move
* U.S. crude drops further than Brent
* Eyes on Ireland's expected bailout package
* Shell declares force majeure on some Nigerian supplies
(Updates prices, adds Nigerian disruption)
By Zaida Espana and Isabel Coles
LONDON, Nov 19 (Reuters) - Oil prices eased towards $81 a
barrel on Friday as speculation of a Chinese interest rate
increase mounted following a move to increase its banks' reserve
requirements for the second time in two weeks.
By 1400 GMT, U.S. crude oil <CLc1> was down 64 cents to
$81.21 a barrel. Prices remained volatile ahead of the December
crude contract expiry on Friday, having traded as high as $82.75
and as low as $81.10.
Friday's move is the second time in two weeks that China has
increased banks' reserve requirements, a measure widely expected
to be a precursor to an interest rate increase.
Brent crude futures <LCOc1> fell only slightly, trading down
16 cents at $84.89 a barrel.
World stocks inched lower and commodity prices fell across
the board, with gold <XAU=> surrendering earlier gains to
$1,348.75 an ounce by 1321 GMT. []
"I would think the impact is limited as it's not an interest
rate increase but just a hike of minimum reserve requirement; so
this is not an increase in borrowing costs but a withdrawal of
excess liquidity," Commerzbank analyst Carsten Fritsch said.
"Only when they in fact do hike interest rates, this will
have a more negative impact on oil."
Expectations of a rate increase rose after a report in a
Chinese newspaper suggested Friday could be a convenient time to
raise rates before banks settle accumulated interest on the 20th
day of the month. [] []
Bache Commodities' senior vice president Christopher Bellew
said an interest rate increase would be positive for commodities
in the long term.
"Some monetary tightening by China, though it might seem
bearish in the longer term, benefits everyone."
IRELAND DEBT WOES EASE
Brent crude drew support from a disruption to supply in
Nigeria, whose crude is priced in relation to the North Sea
benchmark, oil traders said.
Royal Dutch Shell Plc's <RDSa.L> Nigerian venture on Friday
declared force majeure on Bonny Light oil exports after a
pipeline was damaged. []
Attention remained on the prospect that debt-ridden Ireland
will obtain a bailout loan from the European Union and the IMF
to shore up its banks.
"The announcement of some type of financial assistance for
Ireland seems imminent," Gain Capital Forex.com senior
strategist Daniel Hwang said in a note. "A resolution before end
of week is likely to see risk sentiment improve and help keep
oil prices supported above the $80 per barrel level."
[]
U.S. Federal Reserve Chairman Ben Bernanke countered
criticism of the Fed's quantitative easing programme in remarks
prepared for the European Central Bank conference.
The ECB's president, Jean-Claude Trichet, will deliver a
keynote address at 1415 GMT.
No major economic indicators are due on Friday.
(Additional reporting by Osamu Tsukimori in Tokyo; editing
by Keiron Henderson)
