* U.S. EIA reports large rise in crude inventories
* Dollar at three-year low against major currencies
* Coming up: FOMC rate decision; 1630 GMT
(Adds U.S. inventory report, updates prices)
By Alex Lawler
LONDON, April 27 (Reuters) - Brent oil pared gains to around
$124 a barrel on Wednesday and U.S. crude fell as a big rise in
U.S. inventories countered support from a weaker dollar before a
Federal Reserve statement expected to keep a loose monetary
policy.
U.S. crude stockpiles rose by 6.16 million barrels, the U.S.
Energy Information Administration said in a weekly report at
1430 GMT, much more than expected, while supplies of gasoline
and diesel fell. []
"After the market's knee-jerk reaction, we didn't see any
new selling. Falling fuel inventories seem to provide support,"
said Gene McGillian of Tradition Energy in Connecticut. "The
market is waiting for the Fed announcement later."
Brent crude for June <LCOc1> was up 25 cents to $124.39 a
barrel by 1508 GMT. On Tuesday, it gained 48 cents to settle at
$124.14 a barrel, having bounced off a $122.78 low. U.S. crude
<CLc1> was down 35 cents to $111.86.
Dollar weakness lent oil and other dollar-denominated
commodities such as gold some support.
The dollar slid to a three-year low against other major
currencies as investors bet that the Fed, after its meeting that
ends on Wednesday, would keep an easy policy. Its decision is
due at 1630 GMT.
"Dollar weakness, and continuing trouble around the world,
is supporting the market," said Christopher Bellew, a broker at
Bache Commodities.
Violence in the Middle East has spilled over to Syria and
Yemen. Italian oil and gas group Eni <ENI.MI>, reporting
earnings on Wednesday, said production fell almost 9 percent in
the first quarter because of unrest in Libya. []
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Lending support to Brent, BP said the North Sea's Forties
pipeline may have to be shut for a few days later this year due
to the discovery of an unexploded German mine from World War
Two. []
U.S. INVENTORIES
The crude inventory rise reported by the EIA was larger than
the 4.9 million-barrel increase given by industry group the
American Petroleum Institute on Tuesday. []
Gasoline stocks fell 2.51 million barrels, compared with
forecasts for a 1.1 million barrel drop, the EIA said.
Distillates, expected to rise, fell 1.81 million barrels.
U.S. crude has risen more than 20 percent so far this year
and consumers in the world's largest economy are starting to
show signs of being hurt by higher fuel costs.
President Obama on Tuesday urged 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 towards $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 a strike last week by truckers in China
protesting over higher fuel costs.
OPEC has declined to make any official change in its oil
output policy, but members including Saudi Arabia have been
informally adding extra supplies. []
(Additional reporting by Manash Goswami in Singapore and
Reuters energy desk in New York; editing by Jason Neely and Jane
Baird)
