UPDATE 5-Oil up near $110 on weak dollar, Chinese growth data
* China's Q3 GDP growth in line, but outlook foggy
* Weak U.S. dollar boosting commodities
* Ample supplies providing downwards pressure
(Updates prices, adds quote)
LONDON, Oct 18 (Reuters) - Brent crude futures rose above $110 a barrel on Friday, supported by a weak U.S. dollar and third quarter GDP growth data from China which matched consensus expectations.
Brent crude was up 20 cents at $109.31 a barrel by 1400 GMT after earlier rising as high as $110.24, while U.S. crude oil was up 29 cents at $100.96.
Both contracts had risen over a dollar as U.S. traders arrived at their desks, before slipping back. Thin trading volumes likely contributed to the price volatility, said Christopher Bellew, an oil trader at Jefferies Bache.
Analysts said oil was being supported by a weak U.S. dollar, which is trading at an eight-and-a-half month low against a basket of currencies, and decent economic growth data from China, the world's second biggest oil consumer.
"The weaker dollar is having an impact on all commodities, and positive Chinese GDP data are boosting oil," said Fawad Razaqzada, an analyst at GFT Global Markets.
But he was sceptical the rally would persist given a backdrop of bearish supply and demand fundamentals, and easing geopolitical tensions. "In the short to mid-term I expect prices to fall due to rising supply and progress in talks with Iran," he said.
The dollar has declined sharply since U.S. politicians backed away from a debt default. Foreign exchange traders believe this will prevent the Federal Reserve from scaling back monetary stimulus.
If the Fed keeps printing money, the price of the dollar will be further eroded. This makes commodities priced in dollars cheaper for buyers using other currencies.
Data from China showing the economy grew at its quickest pace this year between July and September, up 7.8 percent, in line with expectations, also supported oil.
But analysts said the outlook for the fourth quarter was less promising, pointing to falls in exports in September and volatile global demand.
In addition, implied oil demand in China posted its first yearly decline in 17 months in September as refiners cut crude runs and carried out maintenance. Fuel demand was down 1.8 percent, the first yearly fall since April 2012.
"Crude oil imports hit a record level in September so there must have been a huge inventory build to explain this," said Carsten Fritsch, an oil analyst at Commerzbank in Frankfurt.
For the first nine months of 2013, Chinese implied oil demand rose 3.5 percent to 9.74 million bpd, according to Reuters' calculations, but was below last year's 4.5 percent growth rate, which was already the slowest in four years.
Analysts said overall sentiment across commodity markets was weak, with investors preferring to load up on equities.
"The S&P 500 printed a new record high yesterday but the disconnect between equities and commodities is growing as the idea of quantitative easing has stopped producing miracles for commodities," Olivier Jakob, an oil analyst at Petromatrix, said in a note.
"The supply and demand in oil is balanced enough and from refining margins to U.S. domestic supplies to Iran sanctions there are enough inputs for crude oil to trade on its own fundamentals rather than follow the flow on QE," he said.
(Additional reporting by Manash Goswami in Singapore and Alexander Winning in London; editing by James Jukwey)