* Chinese data, Fed caution dent prices
* API data on U.S. crude inventory climbs more than expected
* Options, traders show glimmer of future bullishness
(Repeats to additional subscribers)
By Amanda Cooper
LONDON, Jan 27 (Reuters) - Oil futures fell on Wednesday,
after a surprise rise in U.S. inventories wiped out the optimism
that had built up the day before over the potential for the
world's largest exporters to cut output enough to stem a
19-month-long price slide.
Another contraction in industrial profits in top commodities
consumer China, along with caution before the outcome of the
U.S. Federal Reserve's first policy meeting of the year, knocked
around $1 off the price of oil.
Oil prices bounced on Tuesday after senior OPEC and Russian
officials stepped up vague talk of possible joint action to
eliminate one of the largest surpluses in modern times.
Brent crude LCOc1 fell 55 cents to $31.25 a barrel by 0924
GMT, having risen by some 3 percent on Tuesday. U.S. crude
futures CLc1 fell 94 cents to $30.51 a barrel.
"We are going to trough several times this spring. It's a
terrible situation in the physical market and stocks are just
going to pile up more, so we will get these reels down again. We
haven't seen the end of that process of being 'deep in the
ditch'," SEB analyst Bjarne Schieldrop said.
"Medium-term, there will be gradual improvement, but at
least this first half of the year will be ugly."
U.S. crude stocks rose by 11.4 million barrels last week to
496.6 million, the American Petroleum Institute said, topping
analyst expectations for an increase of 3.3 million barrels.
API/S
"The positive sentiment stemmed from strong U.S. corporate
earnings and talk of OPEC and Russia considering production
cuts. We consider the likelihood of any agreement between these
parties as extremely low," ANZ said in a note.
"However, rising U.S. crude stockpiles are likely to remain
a headwind in the near term."
That said, oil bulls are gradually starting to emerge, with
this month's drop below $30.
The options market shows traders are buying up protection
against a rise to at least $40 by the end of the year, and
speculators have increased their bullish bets on the price
through the futures market.
Also three U.S. shale oil companies have slashed their 2016
capital spending plans more than expected in a bid to survive
the $30-a-barrel oil price.
Marco Dunand, the head of Mercuria, one of the world's
biggest trading houses, said the market was close to
rebalancing. Famed oil bull Andrew Hall, head of Astenbeck
Commodities, said the market was ripe for a jump.