* U.S. gasoline stocks fall, crude builds - EIA
* Wall Street Journal report stirs QE doubts
* Concerns over Fed move pushes dollar higher
* U.S. crude to average over $83 in 2011-Reuters poll
(Recasts, updates prices and market activity, changes byline
and moves dateline from LONDON)
By Gene Ramos
NEW YORK, Oct 27 (Reuters) - Oil prices dipped more than 1
percent on Wednesday as the dollar strengthened amid doubts
percolating among investors about the size of an anticipated
U.S. economic stimulus move by the Federal Reserve.
Prices were off the day's lows as U.S. government data
showed gasoline stocks in the world's largest oil consumer fell
by 4.4 million barrels last week, surprising the market.
[] []
But, overall, oil investors were disappointed as crude
inventories fell 5 million barrels, much more than forecast,
though that was less than Tuesday's industry report of a
6.4-million-barrel drawdown.
"While product inventories drop, the overall sense of this
report was bearish, with a larger-than-expected build in crude
stocks leading the way," said Tim Evans, an energy analyst at
Citi Futures Perspective in New York.
U.S. crude for December delivery <CLc1> fell $1.25 to
$81.30 a barrel at 12:58 p.m. EDT (1658 GMT), after falling to
a low of $80.52. In London, ICE December Brent <LCOc1> was down
$1.10 at $82.56 per barrel.
Oil prices were down 2 percent before the release of the
U.S. Energy Information Administration's inventory report, as
the dollar rose on mounting questions about how far the Federal
Reserve will go to provide fresh stimulus to the flagging
economy.
The negative correlation between the dollar and the price
of oil was near its strongest level in 14 months in the run-up
to the Fed meeting on Nov. 2-3, when it is expected to detail
how much money will be pumped into the U.S. economy.
A stronger dollar can pressure oil prices by making
dollar-denominated oil dearer to users of other currencies and
by pulling investment into other markets from commodities,
which are viewed as riskier bets.
WALL STREET DIPS, BUT OIL SEEN HIGHER
U.S. equities also fell as investors appeared to be
lowering expectations on how aggressively the Fed may move to
give the economy a shot in the arm, helping drag down oil
prices.
Speculation that financial markets may have priced in too
much monetary easing by the Fed was stoked further by a Wall
Street Journal report that the central bank's Treasury
bond-buying program was likely to be worth "a few hundred
billion dollars."
Investors had been counting on between $500 billion and $1
trillion in potential government asset-buying to help bolster
the economic recovery.
"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.
The potential new monetary stimulus has led 33 analysts
polled by Reuters to forecast that oil prices will average more
than $83 a barrel next year. []
It was the first time in six months that analysts had
raised their forecast, but some said the revised outlook was
fragile as the amount and delivery method of new U.S. monetary
easing could still surprise to the demand side.
Combined with weak oil demand growth, that could put oil
prices under pressure, the analysts said.
In France, seven out of 12 oil refineries were set to
resume fuel deliveries as walkouts ended at two plants on
Wednesday, further easing a strike movement that had resulted
in shortages at the pump across the country. []
However, workers at the key Fos Lavera oil hub, who have
been on strike for a month, will continue their action until a
deal is found with management over port reform.
[]
(Additional reporting by Robert Gibbons in New York, Isabel
Coles and Joe Brock in London; Editing by Walter Bagley)
