* Oil rises first on China rate, then succumbs to dollar
rally
* Gains on Wall Street help crude prices to pull back some
losses
* Heavy U.S. crude stockpile build weighs on prompt WTI
contract
* Contango in prompt WTI vs second month at May highs
* Coming up: Baker Hughes (N:BHI) U.S. oil rig count at 1 p.m. (1700
GMT)
(Adds latest market moves)
By Barani Krishnan
NEW YORK, Oct 23 (Reuters) - Oil fell on Friday, erasing
early gains as traders dismissed a rate cut by China to focus on
a surging dollar and weaker spot prices for U.S. crude as a glut
weighed on prompt supplies.
A rally in U.S. stocks .SPX , however, bolstered risk
appetite across financial markets, limiting the downside in oil.
.N
Brent crude oil LCOc1 was down 28 cents at $47.80 a barrel
by 11:10 a.m. EDT (1510 GMT), after falling as much as 63 cents
earlier.
U.S. West Texas Intermediate (WTI) crude CLc1 was down 75
cents, or 1.6 percent, at $44.68, after hitting a three-week low
at $44.20.
Both Brent and WTI have lost about 5 percent on the week,
sliding for a second straight week.
Earlier on Friday, oil prices rose about 1 percent on
expectations the Chinese rate cut might prompt the No. 1 energy
consumer to import more oil. urn:newsml:reuters.com:*:nENNF8P0SQ
Gains, however, faded as the dollar index .DXY hit
two-month highs, making oil, copper and a host other commodities
.TRJCRB , less affordable for holders of other currencies.
"It's terrible price action considering China's rate cut,"
said Scott Shelton, energy broker and commodities specialist for
ICAP (L:IAP) in Durham, North Carolina. "It shows this is not the
solution the market is seeking for crude demand."
A stubborn global oil glut, partly due to record pumping by
the biggest producers in OPEC, has prevented crude prices from
staging a meaningful rebound despite a few sharp intermittent
rallies since early September.
U.S. crude stockpiles have risen for four straight weeks
amid reduced refining activity during the autumn maintenance
season. EIA/S
Prompt WTI was at its largest discount in five months to the
nearby contract CLc1-CLc2 , Reuters data showed, as traders saw
more benefit in storing crude for later delivery due to the weak
spot prices.
That discount, known as contango, has been widening since
Wednesday, reaching a May 19 high of 87 cents.
"We've had massive builds. The whole spread curve in WTI is
getting weaker, encouraging people to put oil into storage,"
said Tariq Zahir, trader in crude oil spreads at Tyche Capital
Advisors in Laurel Hollow, New York.
Investors awaited U.S. oil rig data on Friday for guidance
on how domestic production of crude has responded to recent
price falls.
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Chart on Brent oil http://graphics.thomsonreuters.com/US/2/PVB_20152310085803.png
Chart on U.S. oil http://graphics.thomsonreuters.com/US/2/PVB_20152310084057.png
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