* Oil holds gains, dollar seesaws after Fed plans
* Fed to buy $75 bln/month in long-term Treasuries
* Total Fed bond purchases seen at $600 billion
* U.S. fuel stocks fell last week, crude up-EIA
* Coming up: Friday, US unemployment data
(Recasts, adds details and prices.)
By Joshua Schneyer
NEW YORK, Nov 3 (Reuters) - Oil rose on Wednesday, closing
slightly off a six-month high after the U.S. Federal Reserve
met market expectations with a plan to buy U.S. government debt
to boost the economy.
The U.S. central bank said it would buy around $75 billion
in Treasury bonds per month through mid-2011, totaling around
$600 billion. After the announcement, oil rose slightly and the
dollar weakened. <.DXY>. (To read the full Fed story please
click [])
Oil briefly hit a six-month high in early trade as
investors anticipated the Fed announcement. Data showing U.S.
fuel inventories fell last week also buoyed prices.
U.S. crude for December delivery <CLc1> settled up 79 cents
at $84.69 a barrel, its highest closing price since May 3.
Crude reached a six-month intraday high of $85.36 in morning
trade.
ICE December Brent <LCOZ0> settled up 97 cents at $86.38.
"The market has been very optimistic about this and the Fed
isn't exceeding expectations sufficiently to prompt another
round of commodity inflation," said Joseph Arsenio of Arsenio
Capital Management in Larkspur, California.
Weekly data showed U.S. stocks of gasoline and distillate
fuels fell more than expected last week as the country's
refineries cut utilization rates to the lowest since March,
according to the Energy Information Administration. []
Wide anticipation of the Fed stimulus measures -- meant to
avert deflation and create jobs by easing long-term borrowing
costs -- have already boosted commodities prices and weakened
the dollar over the last few months.
The Fed's plans are in line with consensus expectations,
but are less aggressive than some polled by Reuters had
anticipated. Estimates for overall Fed asset purchases ranged
from $250 billion to $2 trillion.
A weaker dollar can make commodities -- mostly priced in
dollars -- more attractive to investors. More borrowing spurred
by Fed easing could expand the pool of dollars flowing into
commodities markets.
"The market is volatile, but the package was bigger than
expected so that has pressured the dollar and lifted
commodities," said Richard Ilczyszyn of Lind-Waldock in
Chicago.
U.S. ECONOMIC DATA IMPROVE
Following the Fed's announcement, commodities investors may
return to closer scrutiny of the fundamentals of oil supply and
demand and broad economic indicators, analysts said.
"More important to the oil market now is demand, which is
effectively stagnant in the United States, according to the
most recent (EIA) report," said Arsenio.
More evidence about the state of the U.S. economy, which
would affect future demand, will arrive on Thursday, with
weekly jobless claims data, and Friday, with monthly payrolls
data and the unemployment rate from the Labor Department.
Although fuel stocks fell, U.S. crude stockpiles rose by 2
million barrels last week, EIA figures showed, leaving a major
U.S. crude surplus compared to the same period of 2009.
(Graphic: http://link.reuters.com/man63q )
Total U.S. oil product demand fell week-on-week by 156,000
barrels to 19.3 million barrels, although a fall in refinery
utilization, to 81.8 percent, helped draw down distillate
stocks by 3.6 million barrels and gasoline stocks by 2.7
million barrels last week.
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.
(Additional reporting by Gene Ramos, Robert Gibbons, Eileen
Moustakis and Edward McAllister in New York, Zaida Espana in
London, and Alejandro Barbajosa in Singapore; Editing by David
Gregorio)
