Oil rises above $83 on French strike, dollar

By Robert Gibbons

NEW YORK (BestGrowthStock) – Oil prices rose above $83 a barrel on Monday, the biggest percentage gain in two weeks, as a strike in France tightened fuel supplies and the dollar pulled back from early gains.

The dollar’s early strength had pressured oil, but the greenback later gave up gains against the euro and a basket of currencies (.DXY: ) adding spring to the oil price bounce.

The dollar has had difficulty holding on to gains as investors remain convinced that the U.S. central bank will pump more money into the economy to lend support to a faltering recovery.

U.S. crude for November delivery rose $1.83, or 2.25 percent, to settle at $83.08 per barrel. In London, ICE Brent December crude rose $1.92, or 2.33 percent, to settle at $84.37 a barrel.

“The French strike at Fos-Lavera oil port is supportive for U.S. refined products as it threatens U.S. imports and that has also helped pull up crude futures,” said Andy Lebow, broker at MF Global in New York.

Nationwide strikes over pension reforms in France have spread to the country’s 12 oil refineries over the past seven days, adding to the impact of a three-week strike at France’s largest oil port, Fos-Lavera.

France began to tap emergency fuel reserves as strikes by refinery and port workers continued and a growing number of fuel stations began to run dry.

“RBOB (gasoline) and heating oil (futures) are up on the French strike. There is an expectation the U.S. will be exporting more gasoline and distillate and that cargoes from Europe will not be coming here,” said Phil Flynn, analyst at PFGBest Research in Chicago.

U.S. gasoline and heating oil futures, the distillate benchmark, also rose 2 percent as the French strikes continued to hit fuel production in the region.

Crude oil prices fell early on Monday to below $81 a barrel as the U.S. dollar enjoyed its own bounce, coming back from a 10-month low against a basket of currencies as investors trimmed bearish bets against the greenback due to uncertainty over the extent and impact of further monetary easing.

U.S. Federal Reserve Chairman Ben Bernanke on Friday gave his most explicit signal yet that the U.S. central bank was set to loosen monetary policy further in a debt purchase program described as a second round of quantitative easing, or QE2, but he gave no details about the Fed’s next step.

The Federal Reserve next reviews policy on November 2-3, when details about any stimulus moves and their implementation might emerge.

A Federal Reserve report on Monday said U.S. industrial production fell in September, against analyst expectations it would rise, while capacity utilization eased slightly. The report was viewed as supportive to the expectation there will be more monetary easing.

U.S. stocks (Read more about the stock market today. ) advanced, led by gains in financial companies as Citigroup reported stronger-than-expected profits and concerns about lenders’ home foreclosure problems eased. (.N: )

Oil prices moved back above $80 this month on optimism a boost to the U.S. economy would improve weak fuel demand but the rally lost steam at the end of last week and oil finished lower on a weekly basis.

Concerns about high U.S. oil inventories and tepid demand have also kept oil prices in check. A Reuters analyst survey on Monday yielded a forecast for crude oil stockpiles to have risen last week on an import rebound, while refined products stocks fell.

Weekly oil inventory data from the American Petroleum Institute, an industry group, will arrive late on Tuesday, with the government’s report from the U.S. Energy Information Administration is set for a Wednesday morning release.

(Additional reporting by Gene Ramos in New York and Isabel Coles and Joe Brock in London; Editing by Lisa Shumaker)

Oil rises above $83 on French strike, dollar