UPDATE 3-Oil weaker as dollar firms, strike eyed

* Strike, higher product prices may support crude -analyst

* But also creating an oversupply, which may hit crude

* Coming Up: U.S. API weekly oil stocks to Oct 15; 2030 GMT

(Adds fresh quotes, updates prices)

By Zaida Espana and Isabel Coles

LONDON, Oct 19 (BestGrowthStock) – Oil fell on Tuesday, retracing
part of the previous session’s gain, as the dollar climbed and
traders awaited results from U.S. investment banks later in the
day for signs of economic strength in the major oil consumer.

U.S. crude for November (CLc1: ) fell 53 cents to $82.55 a
barrel by 1034 GMT after climbing by 2.25 percent on Monday, the
biggest percentage gain in two weeks. ICE Brent for December
(LCOc1: ) gave up 61 cents to $83.76 a barrel.

The U.S. dollar index (Read more about the global trade. ) (.DXY: ), which measures performance
against a basket of six other major currencies, rose 0.5 percent
after U.S. Treasury Secretary Tim Geithner said his country
would not engage in competitive currency devaluation.

“This has sparked another wave of dollar buying and crude
prices are 60 cents off this morning as a result,” Philip Wiper
from oil brokerage PVM said in a morning note.

Financial bellwethers Goldman Sachs (GS.N: ) and Bank of
America Merrill Lynch (BAC.N: ) are due to release earning figures
later on Tuesday, following Monday’s better-than-expected
numbers from Citigroup. (C.N: )

The market was also seeking direction from a 23-day long
strike at France’s oil hub of Fos-Lavera, which together with
refinery protests, forced the country to tap emergency fuel
reserves this week. [ID:nLDE69H0CV]

“Major supply disruptions historically mean higher prices –
even for crude oil when the disruption is caused by refinery
problems,” Wiper said. “The French refinery strike is moving
towards having a major impact, and as we saw yesterday may just
be beginning to affect outright prices.”

There was however no consensus among analysts about the
extent of the impact from the French strike on feedstock crude

“You can argue that a shortage of oil products (in France)
pushes product prices higher and also crack spreads, which may
support oil prices,” Commerzbank commodities analyst Carsten
Fritsch said.

“But on the other hand there is no shortage of crude oil;
there is actually oversupply given the line of tankers waiting
for offloading, and every day the strike continues, the
oversupply increases, which could also put pressure on prices,”
he added.

Christopher Bellew, oil broker at Bache Commodities, expects
the French strikes will have a bearish impact on prices due to
the limited crude availability in the short term.

“The impact of these strikes if anything is going to be
somewhat bearish because people are not going to be able to burn
oil,” he said.


U.S. crude stockpiles probably rose by 1.6 million barrels
last week, a Reuters survey showed, for their second gain in
three weeks as imports rose, with operations at the Houston Ship
Channel returning to normal.

Oil product supplies were seen tightening, however, due to
maintenance at American refineries and strike-idled plants in

U.S. inventories of distillate fuel, including heating oil
and diesel, probably fell by 1 million barrels last week,
according to the Reuters poll ahead of the American Petroleum
Institute’s (API) weekly supply statistics on Tuesday at 2030

That will be followed by government statistics from the
Energy Information Administration (EIA) on Wednesday. [EIA/S]

Analysts attributed the decline in products, which would be
the fourth in as many weeks, to lower production as refineries
were in seasonal maintenance and a potential increase in demand
as distributors probably restocked.

Gasoline inventories may have also dropped in the week to
Oct. 15 to post their fourth consecutive weekly drop, down by
1.1 million barrels, according to the poll, partly as imports
from Europe slowed because of walkouts at French refineries.
(Editing by Jane Baird and Sue Thomas)

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UPDATE 3-Oil weaker as dollar firms, strike eyed