* Dollar strengthens, euro hit by Irish uncertainty
* Investors wary of possible Chinese rate rise, OPEC meeting
* Two major report shows oil stocks build in Europe
(Updates with prices turning negative, Europe oil stocks)
By Robert Gibbons and Una Galani
LONDON, Dec 9 (Reuters) - U.S. crude oil futures prices
turned negative on Thursday, erasing previous gains of as much
as $1 after the dollar strengthened and data from Europe showed
a build up in oil stocks despite cold weather.
Analysts and traders also cited profit taking ahead of New
Year and concerns about China raising interest rates to cool
growth as the reason for oil's fall for a third consecutive
session after reaching a 26-month high earlier this week.
"After the move above $90 you expect to see some profit
taking and a reluctance to go too long... There is nervousness
about the China inflation number due Saturday. If it is a hot
number, an interest rate hike might cause the dollar to soar and
affect commodities," said Richard Ilczyszyn, senior market
strategist at Lind-Waldock in Chicago.
Benchmark U.S. light crude oil futures for January <CLc1>
traded 22 cents down at $88.06 at 1612 GMT after rising more
than $1 earlier on Thursday. ICE Brent crude <LCOc1> was down 25
cents to $90.52.
U.S. dollar index against the main currencies <.DXY> was up
0.4 percent, recovering from a previous weakness while the euro
slipped to a session low after Ireland's center-left opposition
Labor party said it will vote against a bailout package.
[]
Oil was up earlier on the dollar's weakness and was
supported by a report which showed that U.S. initial jobless
claims fell more than expected last week.
"On the supporting side there is the additional demand
because of the (cold) weather. And then on the other hand if you
look at the U.S. statistics (DOE weekly) that were released
yesterday they were not really supportive. They was showing an
increase in gasoline stocks and an increase in distillate stocks
and it shows a low demand in the U.S," said Christophe Barret,
an analyst at Credit Agricole in London.
In Europe, a major report by Euroilstock for November as
well as last week's data from oil analyst Pieter Kulsen showed
an increase in oil products stocks. [] []
CAUTION
Traders and analysts said they were cautious ahead of the
possible Chinese rate rise and a meeting this weekend of the
Organisation of the Petroleum Exporting Countries, which will
look at its output targets.
OPEC appears unlikely to raise oil supply targets to cap an
oil price rally when it meets in the Ecuadorean capital Quito,
but could hint at the possibility of higher production later.
[]
"The question is if the oil prices rise well above $90 will
they (OPEC) say something about it. Saudi Arabia recently said
prices up to $90 are comfortable but not above $90," said
Commerzbank's analyst Carsten Fritsch.
China is widely expected to raise rates soon.
"We would be cautious going into next week, with the very
real possibility that the Chinese may move on the rate front,"
said Edward Meir, oil analyst at brokers MF Global.
"We do not think that this move is completely discounted
yet, and should it occur, it will likely cause further weakness
in Chinese equity markets, which is bound to spill over into
commodities."
(Additional reporting by Alejandro Barbajosa in Singapore and
Dmitry Zhdannikov in London; editing by James Jukwey)
