* U.S. refinery runs to drop during maintenance
* Dollar strengthens to 4-month high vs. euro
* U.S. inventory reports due out day later than usual
(Updates prices, adds comment)
By Chris Baldwin
LONDON, Jan 20 (Reuters) - Oil slipped below $78 a barrel on
Wednesday on fresh evidence of tightening credit policy in
China, a stronger dollar and expectations that U.S. refiners
processed less crude in the latest week.
U.S. crude for February delivery <CLc1> fell around 2
percent to $77.45 a barrel by 1514 GMT on its last day as the
front-month NYMEX contract. March crude <CLc2> fell $1.53 to
$77.79. London Brent <LCOc1> for March fell $1.49 to $76.14.
A stronger dollar also weighed on crude. The euro fell to
its lowest level in five months against the dollar and sterling
on Wednesday on concern about Greece's fiscal problems. []
New U.S. housing starts unexpectedly fell 4.0 percent in
December [], and U.S. producer prices rose 0.2
percent last month [], but investors did not
interpret the data as being dollar-negative.
"We're starting to see the commodity trade come off, mostly
on the stronger dollar," said market analyst Michael Hewson at
CMC Markets in London.
CHINESE CREDIT
Investors have grown increasingly jittery over China's steps
to limit the availability of credit and head off inflation.
Chinese banking authorities have instructed some major banks
to stop new lending for the rest of January after loan growth
surged in the first few weeks of the year, official media and
banking sources said on Wednesday. []
Last week China raised bank reserve requirements for the
first time since June 2008. []
"China's plans to tighten credit markets continue to cause
concern, meaning that the release of GDP and other economic data
tomorrow will have to be very bullish to offset this," said
David Wech, head of energy studies at JBC Energy in Vienna.
China's December economic indicators will be published on
Thursday at 0200 GMT. Analysts say Chinese industrial production
probably grew at its fastest pace in almost four years, jumping
by 20 percent in the year to December compared with a reading of
19.2 percent in November. []
RISING STOCKPILES
Separately, U.S. crude inventories likely rose for a third
straight week as imports increased and refinery utilisation fell
with the start of the maintenance season, a preliminary Reuters
poll of analysts showed. []
U.S. inventory reports this week are due out a day later
than usual because of Monday's Martin Luther King Jr. holiday.
The American Petroleum Institute will issue its industry report
later on Wednesday at 2130 GMT.
The Energy Information Administration will publish
government data on Thursday at 1600 GMT.
U.S. crude stockpiles were expected to have gained 2.5
million barrels on average the week ended Jan. 15, a survey of
eight analysts showed.
Distillate stocks were projected up 400,000 barrels, with
heating oil demand expected to have fallen amid moderating
winter temperatures in the U.S. Northeast. Gasoline stocks
probably rose 1.9 million barrels.
The country's refinery utilisation was forecast to have
fallen 0.3 percentage point to 81.0 percent of capacity.
Some U.S. refineries have begun their first-quarter
maintenance, with the goal of retooling for gasoline production
ahead of the summer driving season.
(Additional reporting by Alejandro Barbajosa in Singapore,
editing by Amanda Cooper)
