UPDATE 5-Oil falls more than $1 as US inventories swell

                                
 * U.S. crude stocks at 16-year high-EIA
                                
 * Dollar trims losses against Euro
 (Recasts, updates prices, changes dateline from LONDON)
                                
 By Edward McAllister
                                
 NEW YORK, March 25 (Reuters) - Oil fell more than $1 Wednesday as U.S.
government data showed crude stocks were at their highest since 1993 and
the dollar trimmed loses against the Euro.
                                
 The Energy Information Administration's weekly inventory report showed
a more-than-expected 3.3 million-barrel rise in U.S. crude supplies.
[EIA/S]
                                
 Oil was also pressured as the dollar regained ground after U.S.
Treasury Secretary Timothy Geithner said that he believes in a strong U.S.
currency. [ID:nN25423804]
                                
 A stronger dollar makes oil more expensive for holders of other
currencies and tends to pressure prices.
                                
 U.S. light crude for May delivery <CLc1> fell $1.38 to $52.60 a barrel
by 1:37 p.m. (1737 GMT) after earlier falling by as much as $2.12. London
Brent crude <LCOc1> was down $1.54 at $51.96 a barrel.
                                
 "Crude (stocks) still extremely high, distillates still extremely
high...so big picture, it's still overall not pretty, inventory-wise," said
Tom Bentz, senior commodity analyst at BNP Paribas Commodity Futures in New
York.
                                
 Japan, the world's second-largest economy, posted a record drop in
February for exports -- down 49.4 percent -- as global demand for Japanese
cars and electronics evaporated. [ID:nT316314]
                                
 Crude oil import volumes to Japan fell 13.9 percent in February, their
lowest tally for the month in 20 years, preliminary data from Japan's
Ministry of Finance showed.
                                
 CAUTIOUS OPTIMISM
                                
 Analysts said an excess of crude supply on world markets would not
disappear soon, as no demand was surfacing to mop up the excess, and last
week's strong rally might have been an overly earnest response to U.S.
government stimulus plans.
                                
"We haven't seen a dramatic uptick in demand and until we see that
there's going to be a trading range where the mid- to upper 50s is probably
more of a sell signal and in the low forties a bit of buy signal. We're
going to be range-bound here until we see some real news on demand," said
Mike Zarembski senior commodities analyst at OptionsXpress in Chicago.
                                
 On Wednesday European stocks slipped as a recent rally on the back of a
U.S. plan to purge toxic assets from banks' balance sheets lost steam and
figures showed a deterioration of German corporate sentiment. [.EU]
                                
 On Tuesday President Barack Obama renewed calls for leading economies
to boost stimulus spending, repair credit markets and extend aid to poor
countries when Group of 20 leaders meet in London on April 2.
[ID:nN23306403]
                                
 Speaking with cautious optimism on Wednesday, a Chinese central bank
adviser said China, the world's third-largest economy, was showing signs of
improvement.
                                
 "Before (the economy) bottoms out, it has to bottom. I believe it has
bottomed, with the stimulus package and signs of recovery in some
industries," said Fan Gang, who sits on the Chinese central bank's monetary
policy advisory committee, in a Reuters interview in Hong Kong.
[ID:nPEK323419]
 (Additional reporting by Robert Gibbons and Gene Ramos in New York,
Christopher Baldwin in London; Editing by John Picinich)