Oct. 11 (Bloomberg) -- Oil gave up earlier gains as the dollar strengthened and traders bet that demand isn’t recovering fast enough to justify this month’s increase. Global oil markets are “oversupplied,” Iranian OPEC governor Mohammad Ali Khatibi was cited as saying on Oct. 9 by the Iranian Students News Agency. The Organization of Petroleum Exporting Countries may leave oil production unchanged when it meets in three days’ time because signs of a recovery in demand have yet to emerge among the world’s developed economies. “Fundamentals still aren’t strong enough to keep us supported at these levels for the long term, especially if the dollar strengthens,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. Crude for November delivery was at $82.40 a barrel, 26 cents lower in electronic trading on the New York Mercantile Exchange at 12:10 p.m. London time, after gaining as much as 84 cents, or 1 percent, to $83.50 a barrel. Futures climbed 99 cents to $82.66 on Oct 8. Brent crude for November settlement fell as much as 52 cents, or 0.6 percent, to $83.51 a barrel on the ICE Futures Europe exchange in London. The dollar was little changed at $1.3933 per euro after slipping as much as 0.5 percent to $1.4012. The Federal Reserve may purchase bonds in a strategy known as quantitative easing, weakening the U.S. currency. OPEC Quotas The oil market is “a little oversupplied,” Mohamed al- Hamli, the oil minister of the United Arab Emirates, the third- biggest producer in the Organization of Petroleum Exporting Countries, said Oct. 9. OPEC members are all exceeding their allotted quotas after prices surged 78 percent in 2009 and a further 4 percent this year. “I don’t think there will be any shift” in quotas by OPEC, Qatari Oil Minister Abdullah al-Attiyah said in a phone interview yesterday after meeting in Kuwait with ministers from Saudi Arabia and other Persian Gulf nations. “Producers and consumers are happy” with current oil prices, he said. Hedge funds raised bullish bets on oil to the highest level in more than five months amid speculation that the Fed will enact further stimulus measures, data from regulators showed last week. The Fed will release minutes from its September meeting tomorrow. Hedge funds and other large speculators increased wagers on rising crude prices by 44 percent in the seven days ended Oct. 5, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. It was the highest level since April 23. French Strikes A strike by workers at the French port of Marseille’s oil terminals entered its 15th day, forcing the government to transport fuel by road and rail to avoid shortages as refineries in the region begin shutting. Unions have called for a broader, nationwide strike in various industries starting tomorrow at refineries, gas and electricity utilities and the SNCF national railway against the government’s plans to raise the retirement age. Workers have blocked traffic at the oil terminals of Fos and Lavera at Marseille for more than two weeks in protest against a 2008 overhaul of the country’s ports system. Deutsche Bank AG raised its fourth-quarter 2010 and first- quarter 2011 forecasts for both Nymex and Brent oil to $80 a barrel, a level compatible with equity and currency levels, according to an Oct. 8 report by Adam Sieminski, chief energy economist. The bank’s previous forecasts, in mid-September, were $70 for the fourth quarter and $75 for the first. --With assistance from Tara Patel in Paris and Christian Schmollinger in Singapore. Editors: John Buckley, Raj Rajendran To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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