* Wall Street Journal report stirs QE doubts
* Concerns over Fed move pushes U.S. dollar higher
* U.S. crude to average over $83 next year - Reuters poll
* Coming Up: U.S. EIA petroleum inventories; 1430 GMT
(Adds oil price poll, updates prices; refiles to change day
in paragraph one to Wednesday from Friday)
By Isabel Coles and Joe Brock
LONDON, Oct 27 (Reuters) - Oil fell below $82 a barrel on
Wednesday, snapping a three-day rally as mounting doubts about
the size and timing of U.S. economic stimulus pushed up the
dollar.
Negative correlation between the dollar and the price of oil
was near its strongest level in 14 months in the run-up to a
meeting on Nov. 2-3, when the Federal Reserve is expected to
make clear the details of how much money it will pump into the
U.S. economy. []
A stronger dollar can pressure oil prices by making
dollar-denominated oil more expensive to users of other
currencies and by pulling investment into other markets from
commodities, which are viewed as riskier bets.
U.S. crude for December <CLc1> fell 69 cents to $81.86 a
barrel at 1046 GMT, down 3 percent from a five-month high of
$84.43 reached on Oct. 7. ICE Brent <LCOc1> fell 66 cents to
$83.00.
"I think there's a concern that maybe next week's
quantitative easing or stimulus package from the Fed may not be
as big as the markets have probably been factoring in," said
James Hughes, a market strategist at CMC markets.
Doubts that financial markets may have priced in too much QE
were stoked by a Wall Street Journal report on Wednesday, which
said the U.S. Federal Reserve's Treasury bond-buying programme
is likely to be worth "a few hundred billion dollars".
[]
Investors had been counting on between $500 billion and $1
trillion to help the economic recovery.
A Reuters poll of 33 analysts and industry experts predicted
that oil would average over $83 next year as U.S. monetary
stimulus fed through to the economy and boosted fuel demand.
[]
INVENTORIES
Data from the American Petroleum Institute showing
higher-than-expected U.S. crude stocks, which jumped by 6.4
million barrels in the week to Oct. 22, also weighed on the oil
price. The figure was over six times that expected by a Reuters
poll.
"I think we're going to be waiting for the DOE (Department
of Energy) stats to provide some more direction, because the API
stocks did show a fairly large build in crude oil inventories,"
said Amrita Sen at Barclay's Capital.
Government statistics on U.S. inventories and demand from
the Energy Information Administration are due at 1430 GMT.
Distillate inventory statistics were also bearish, showing
an increase of 818,000 barrels, compared with an expected drop
of 1.5 million. But gasoline posted a surprise decline of 1.8
million barrels, compared with a projected 200,000 barrel gain.
Investors were also awaiting U.S. data on durable goods
(1230 GMT) and new homes sales (1400 GMT) for the latest
indication of economic recovery in one of the world's largest
fuel consumers.
Oil refinery strikes in protest against French President
Nicolas Sarkozy's unpopular pension reform eased on Tuesday,
with walkouts ending at several plants and unions sounding more
open to talks with employers. []
(Editing by Jane Baird and Alison Birrane)
