* U.S. crude inventories rise unexpectedly
* Brent rally runs out of stream before $50 barrier
* Dollar rises as Fed keeps rate rise in play
* Supply outages support, but some Nigerian output returning
(Previous SINGAPORE, updates prices, adds quotes)
By Alex Lawler
LONDON, May 19 (Reuters) - Oil fell below $48 a barrel on
Thursday, pressured by a stronger dollar and as a surprise
increase in U.S. inventories served as a reminder that supply
remains ample despite unplanned outages.
Supply losses due to wildfires in Canada and attacks in
Nigeria lent support, but Exxon Mobil (NYSE:XOM) is boosting production of
Nigeria's largest crude stream Qua Iboe after pipeline damage
forced it to slow output, traders said.
Brent crude LCOc1 was down $1.00 at $47.93 at 0841 GMT. It
reached a 2016 high of $49.85 on Wednesday, only to close lower.
U.S. crude CLc1 was down 92 cents at $47.27.
"The late sell-off we saw in the last half an hour of
trading yesterday is being followed through this morning as
hints from the Fed about a possible rate hike next month sent
the dollar index soaring," said Tamas Varga of oil broker PVM.
Oil and other commodities came under pressure from the U.S.
dollar, which firmed as the minutes of the Federal Reserve's
latest policy meeting rekindled expectations for an interest
rate increase.
A stronger dollar makes commodities denominated in the U.S.
currency more expensive for holders of other currencies and
tends to weigh on oil prices.
Brent's 2016 high hit on Wednesday was supported by the
supply outages, but the bull run ran out of steam after weekly
data showed an unexpected 1.31-million-barrel rise in U.S. crude
inventories.
"We feel that markets have moved too high, too far, too
soon," said BNP Paribas (PA:BNPP) in a report. "We still face a large
inventory overhang and for the most part, the outstanding supply
outages - Canada and Nigeria - are reversible."
Despite the outages and falling U.S. output as the
near-halving of oil prices since mid-2014 curbs investment by
shale drillers, OPEC production is at its highest in years
thanks in part to higher Iranian exports.
OPEC and non-members including Russia failed at an April 17
meeting to agree on an initiative to freeze output. OPEC meets
on June 2 to set output policy and is not expected to decide on
any measures to limit supplies.
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GRAPHIC on Asia's Iranian crude oil imports http://graphics.thomsonreuters.com/iran-oil/index.html
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(Additiona reporting by Keith Wallis and Henning Gloystein;
editing by Jason Neely)