Oil surges above 84 per barrel

Expectations the Federal Reserve will announce on Wednesday a fresh round of expansionary monetary policy kept the dollar under pressure,helping commodity prices,while Republican gains in the US Congress lifted sentiment in Wall Street.

US crude inventories fell by 4.1 million barrels in the week to Oct. 29,the American Petroleum Institute API reported on Tuesday,before the Energy Information Administration EIA releases official statistics later on Wednesday. That compared with expectations for a 1.2 million barrel increase.

8220;Overall,it8217;s a bullish set of data,and sets a bullish outlook for the EIA,8221; said Serene Lim,a Singapore-based oil analyst at ANZ. 8220;It could be the beginning of the seasonal downward trend as we enter the winter season in the Northern Hemisphere.8221;

Distillates stockpiles,including heating oil and diesel,fell 4.7 million barrels,more than four times the expected 1.1 million barrel draw in a Reuters survey,while gasoline supplies fell by 3.2 million barrels,against forecasts of little change.

Strikes at French refineries limited European exports of gasoline to the United States,while west-to-east flows of transatlantic distillates probably increased as shortages loomed because of the walkouts,analysts said.

OPEC LIFTS PRICE RANGE

Oil prices at 100 a barrel would be more comfortable for producing nations because of higher food prices and a weaker dollar,the top oil official for OPEC member Libya said on Tuesday.

The Libyan comments came a day after Saudi Arabian Oil Minister Ali al-Naimi said oil prices in a 70-90 range were comfortable for consumers,signaling a higher acceptable range from the 70-80 range previously deemed comfortable.

Qatar8217;s oil minister also said 70-90 per barrel would be reasonable for consumers and producers.

Euro-zone manufacturing picked up its pace last month,a business survey showed Tuesday,one day after better-than-expected US and Chinese factory data increased optimism about the global economy and revived risk appetite.

8220;What we are looking at is economic numbers improving,but how this translates into oil demand growth we may only see next year,8221; Lim said. 8220;At the moment,the well-supplied story is still standing and we don8217;t see demand growth outpacing supply growth until next year.8221;

The US dollar stayed on the backfoot early in Asia on Wednesday,with the euro holding above 1.4000 and the Aussie just off parity as the Federal Reserve looked set to provide more stimulus to spur a flagging recovery.

But some analysts pointed to the risk that the Fed8217;s announcement of a new round of bond purchases,also known as quantitative easing,or QE,would have a limited effect on markets that already priced in the expected effect of the monetary easing.

BNP Paribas head of commodity markets strategy Harry Tchilinguirian said: 8220;We also remain circumspect as to how much more price mileage oil will get from the announcement of a second round of quantitative easing in the short term,8221; adding that if it was already discounted,the recent rally in oil prices might prove to be a case of 8220;buy the rumour,sell the fact8221;.

Asian stocks rose on Wednesday following overnight gains on Wall Street as Tuesday8217;s mid-term elections in the US looked to favour the Republican party.

Republicans rolled up key early US election wins on Tuesday after a long and bitter campaign that could sweep Democrats from power in Congress and slam the brakes on President Barack Obama8217;s agenda.