* Brent drops 30 cents to $123.84; U.S. crude falls to
$111.71
* Euro scales fresh 16-month peak against dollar early in
Asia
* Brent oil may rise towards $126.48/bbl -technicals
[]
* Coming up: FOMC rate decision; 1630 GMT
(Adds U.S. stockpiles data; updates prices)
By Manash Goswami
SINGAPORE, April 27 (Reuters) - Crude futures fell on
Wednesday as investors waited for details of the U.S. Federal
Reserve's assessment of the economy and its monetary policy
stance, while a weak dollar provided support.
Brent crude for June <LCOc1> dropped 28 cents to $123.86 a
barrel by 0348 GMT. On Tuesday, it gained 48 cents to settle at
$124.14 a barrel, having bounced off a $122.78 low. NYMEX
futures <CLc1> fell 17 cents to $112.04.
A slide in the dollar to near 2-1/2-year lows has also
helped silver prices rebound from the previous session's sharp
falls, and gold edge higher.
The greenback has declined as investors bet the Fed's
monetary policy meeting, which ends on Wednesday, would keep an
easy policy, helping support dollar-denominated oil that has
attracted investment as a hedge against inflation.
"Investors are being very cautious ahead of the Fed meeting
and prices are drawing support from a weak dollar," said Serene
Lim, an analyst at ANZ. "Oil will continue to trade in this
range till the outcome of the Fed meeting is known at least."
Lim also expects oil to trade around this range in coming
days, largely supported by a weak dollar, as the Fed is expected
to continue with its accommodative stance, while any indication
of a change may boost the dollar and cap oil prices.
"Any signs of a tightening bias could renew interest in the
dollar and that may limit gains in oil prices," Lim said.
High inventories in the U.S. also weighed on prices. Crude
stocks jumped 4.9 million barrels last week as imports
increased, the industry group the American Petroleum Institute
(API) said. Gasoline stocks fell 2.1 million barrels and
distillate inventories rose 1.5 million barrels.
Ahead of the API report, a Reuters poll on Tuesday yielded a
forecast for crude stocks to be up only 800,000 barrels.
Gasoline stocks were expected to be down 1.1 million barrels and
distillate stocks nearly unchanged, up only 100,000 barrels.
Home prices fell for an eighth month in February, inching
closer to an April 2009 trough, underscoring the challenges
facing the recovery. []
HURTING CONSUMERS
The world's top consumers are starting to show signs of
being hurt by rising oil prices. U.S. President Barack Obama on
Tuesday urged world producers to lift crude output as he sought
to deflect public anger over high gasoline prices. U.S. motor
fuel prices have become a heated political issue after pushing
toward $4 a gallon. []
Obama's appeal followed comments from top oil exporter Saudi
Arabia earlier in the day that it was not comfortable with high
oil prices and concerned about their impact on the global
economy. []
Just days earlier, China grappled with a strike by truckers
against the steep increases in gasoline and diesel prices.
[]
Technicals show Brent may break a resistance at $124.81 per
barrel and rise towards $126.48, while U.S. oil <CLc1> will be
technically neutral before it escapes from a consolidation range
of $111.08-$113.48 per barrel, according to Reuters market
analyst Wang Tao.
Standard and Poor's on Wednesday threatened to cut Japan's
sovereign rating, warning that the huge cost from last month's
devastating earthquake will hurt the world's third-largest oil
consumer's already weak public finances without tax hikes.
[]
MIDDLE EAST UNREST
Violence in the Middle East has spread and intensified in
recent weeks, spilling over to Syria and Yemen, helping put a
floor under oil prices, analysts said.
"The unrest has been largely factored in," ANZ's Lim said.
"Unless anything dramatic happens, they will continue to support
oil prices."
Syrian President Bashar al-Assad poured troops into a suburb
of the capital overnight while his tanks pounded Deraa to crush
resistance in the southern city where the revolt against his
autocratic rule began on March 18. []
The military deadlock in Libya has exposed growing
international rifts, highlighting the possibility of unrest in
Libya being dragged out. Critics of NATO bombing called it
another case of the West trying to overthrow a regime by
stretching the terms of a U.N. resolution.
British and U.S. officials met on Tuesday to discuss how to
step up military pressure on Gaddafi, as the Libyan leader's
army fought fierce clashes with rebels in besieged Misrata.
[]
Saboteurs blew up a pipeline running through Egypt's North
Sinai on Wednesday that supplies gas to Israel and Jordan, a
security source told Reuters.
"An unknown armed gang attacked the gas pipeline near Arish
city," the security source said, adding that the flow of gas to
Israel and Jordan had been hit. []
(Editing by Clarence Fernandez)
