SINGAPORE, Dec 7 (Reuters) - Brent crude rose above $111 on Wednesday after the euro strengthened against the U.S. dollar on hopes that European policy makers will unveil a concrete plan to tackle the region's debt crisis at a summit this week.
The euro's rise pushed the greenback lower against a basket of currencies, making dollar-denominated assets like oil pricier when purchased in other currencies.
Brent crude climbed 36 cents to $111.17 a barrel by 0744 GMT, after settling Tuesday $1 higher at $110.81 a barrel. U.S. crude gained 43 cents to $101.71 a barrel.
But investors were likely to stay cautious ahead of Friday's summit and a meeting of the European Central Bank (ECB) to decide on the direction of interest rates.
"The market will trade cautious before the ECB rate decision and the EU summit on Friday. Investors have priced in a positive outcome at the summit, so we might see a sell-off if the meeting disappoints," said Natalie Robertson, a commodities analyst with ANZ Bank in Melbourne.
Expectations of an interest rate cut by the ECB when it meets on Thursday have risen after statistics agency Eurostat confirmed estimates pointing to weakening growth, also aiding oil futures.
Asian equities and other commodities also traded higher on optimism that recent credit warnings by Standard & Poor's will drive EU leaders to take more decisive action.
"A positive outcome could make Brent break the $112.50 resistance area, whereas a negative outcome might send it, at least short term, below the support around 108.50," said Michael Poulsen, an analyst with Global Risk Management in a research note.
A sharper-than-expected fall in U.S. crude stocks failed to significantly boost oil prices, as the bullish data was offset by larger-than-projected builds in gasoline and distillate inventories, industry data showed on Tuesday.
A clearer picture of U.S. stocks will emerge when the U.S. Energy Information Administration announces its weekly report later on Wednesday.
CHINA WATCH, IRAN RISK
The market also awaits over the coming week the release of Chinese economic data likely to show further signs of cooling in the world's second-biggest oil consumer in November.
Ahead of the data's release, a senior official said on Wednesday China's annual rate of export growth slowed in November versus October.
Inflation is also expected to have eased sharply last month, giving Beijing more room to focus on growth and consider further policy easing after cutting banks' reserve requirement ratios last week for the first time in three years.
The key events in Europe this week have overshadowed tension between Iran and the West over the Middle Eastern nation's nuclear programme and the prospect of a supply disruption from the world's fifth-largest oil exporter.
"There's been a lot of talk about the Iran situation and the impact on prices but that's going to take a back seat to Europe this week," said Robertson.
However, the threat of shipments being disrupted remains, with EU Energy Commissioner Guenther Oettinger saying on Tuesday European Union states have a consensus on the need for a ban on Iranian oil exports to the bloc.
SAUDI OUTPUT
Top oil exporter Saudi Arabia produced 10 million barrels per day of oil in November, Bloomberg reported, citing Oil Minister Ali al-Naimi.
It was unclear if the figure included both crude oil and condensate or just crude. Naimi, in a speech read out by his adviser Ibrahim Muhanna on Sunday, said the country is producing more than 10 million barrels per day of crude oil and gas condensates.
The country produced 9.45 million barrels per day (bpd) of crude in November versus 9.40 million bpd in October, according to a Reuters survey.
The International Energy Agency's executive director, Maria van der Hoeven, said on Wednesday recent oil output levels by OPEC producers are appropriate for the oil market throughout 2012.
OPEC is due to meet on Dec. 14 in Vienna to set output targets for early 2012. Group members, at odds over supply policy since June, looked set to agree on a new production target that legitimises current cartel output at around 30 million barrels a day. (Editing by Sugita Katyal)
