RTRS: UPDATE 5-Oil rises as strikes offset dollar bounce
* Rally on talk of economic stimulus loses steam
* French refinery strikes enter 7th day, supports oil
* Firmer U.S. dollar adds pressure
(Updates throughout)
By Isabel Coles and Joe Brock
LONDON, Oct 18 (Reuters) - Oil rose towards $82 a barrel on Monday, after earlier hitting its lowest in over a week, as strikes at French refineries made up for losses wrought by a rallying dollar and doubts over the U.S. economic outlook.
The week-old action, which has brought operations at France's 12 refineries to a near-standstill, lifted refined products futures and in turn sent crude oil prices up, offsetting the effects of a stronger dollar. [ID:nLDE69H0CV]
U.S. crude for November CLc1 up 61 cents to $81.86 by 1402 GMT, after earlier hitting a session trough of $80.35, the lowest point since Oct. 8. December ICE Brent LCOc1 fell 4 cents to $82.41.
"I think that the only thing that is really supporting prices for now is the strike at Fos-Lavera that is removing product out of the market and supporting refinery activity elsewhere in Europe," said Christophe Barret, oil analyst at Credit Agricole.
He was referring to a Mediterranean oil hub which has been blocked for 3 weeks by a protest against pension reform.
Oil defied a bounce in the U.S. dollar, which came back from a 10-month low against a basket of currencies on Monday as investors trimmed bearish bets against the greenback due to uncertainty over the extent and impact of further monetary easing. .DXY.
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 programme described as a second round of quantitative easing, or QE2, but he gave no details about the Fed's next step.
"It looks like we are revising down the possible impact of QE2 and I think prices will return to the $70-$80 range in the coming days or weeks," Barret said.
Oil pierced the upper end of a $70-$80 trading range this month that had held for much of the last year, on optimism a boost to the U.S. economy would improve weak fuel demand but the rally fizzled out at the end of last week.
The Fed next reviews policy on Nov. 2-3, when details about any stimulus moves and their implementation could emerge.
U.S. industrial production unexpectedly fell in September, while capacity utilization eased slightly, according to a report on Monday that supported expectations of further monetary easing next month. [ID:nN18110437]
