* Firmer dollar and concerns of oversupply weigh on mood
* Investors uneasy over India's unexpected interest hike
* China's domestic fuel demand leads to lower exports
* Coming up: Euro zone summit - March 25-26
By Seng Li Peng
SINGAPORE, March 22 (Reuters) - Oil fell towards $80 a
barrel on Monday, extending the previous session's near 2
percent drop, dragged by a stronger dollar on nagging worries
over Greece's debt while India's surprise rate rise stoked
fears over demand.
However, concerns of continuing global fuel oversupply are
countered by data showing China's fuel exports slid in February
versus the previous month as oil companies prepared for an
upcoming domestic demand jump when factories return to work
after the winter.
U.S. crude for April delivery <CLc1>, which expires later
on Monday, slipped for the third-straight session, down 50
cents to $80.18 a barrel at 0338 GMT. It had settled at $80.68
on Friday, which saw its worst percentage loss since Feb. 25,
and also marked two consecutive weeks of falls.
[].
London Brent crude for April <LCOc1> fell 35 cents to
$79.53 a barrel.
This month, oil has managed to top $83 four times, but has
failed to hold the gains. In part, that inability stems from
expectations of oversupply this year.
A Reuters poll of 10 oil-tracking analysts and
organisations showed the oil market will likely face oversupply
of 150,000 barrels per day (bpd). [].
"The overall market fundamentals are still not tight.
These, combined with the recent strengthening of the U.S.
dollar in the last few months, have been one of the reasons why
oil is unable to extend its rally," said Toby Hassall of CWA
Global Markets in Sydney.
"We just have not seen enough fundamentals to justify
further increase in the price. We are still seeing oversupply
in Europe and the U.S.," he added.
DOLLAR STRENGTH WEIGHS
The U.S. dollar index, measured against a basket of
currencies, was up 0.1 percent to around 80.81 <.DXY>, above
last week's 79.825 low. <.DXY> The index had rallied 1.4
percent late last week as the euro succumbed to fresh worries
over Greece and its ability to fund itself without euro zone
support.
The euro remained under pressure ahead of a euro zone
summit, and was languishing at $1.3518 <EUR=D4>, down from
$1.3535 late in New York on Friday, when the single currency
had fallen to its lowest in more than two weeks against the
dollar. [] [].
EU leaders seemed at odds over how or whether to offer
assistance setting the scene for a tense summit on March 25-26.
<ID:nLDE62K0C9> <ID:nLDE62K0M6>
Commodity-linked currencies and those leveraged to global
growth such as the Australian <AUD=> and New Zealand dollars
<NZD=> were still reeling from Friday's unexpected increase in
interest rates from India [].
A firmer dollar makes oil, priced in dollars, more costly
for foreign currency holders. It also indicates investors
shifting away from assets deemed riskier, such as commodities
and equities, and into safe-haven bets like U.S. Treasury
notes.
Gold also fell further on Monday as investors sold into a
stronger U.S. dollar. []
India raised interest rates last Friday from record-lows
for the first time since it began cutting in 2008, adding to
the gloom, as investors feared the tightening move would curb
consumption even as the market is looking to robust economic
growth in India and China to lead fuel demand. [].
But China's return to robust manufacturing activity after
the slowdown during the cold winter and the Lunar New Year
break, could still offer some hope to oil markets. This is
marked by a 28 percent fall in February gasoline exports
against a year earlier to 210,785 tonnes and in contrast with
January's 600,533 tonnes and a decade peak of almost 1 million
tonnes in December.
Diesel exports declined by 11.8 percent last month from a
year earlier to 290,000 tonnes, well below 463,800 tonnes in
January. The drops turned China back into a net fuel importer
after being a net exporter in both January and December.
[]
(Editing by Ramthan Hussain) ((lipeng.seng@thomsonreuters.com;
+65 6870 3086; Reuters Messaging:
lipeng.seng.reuters.com@reuters.net)) ((If you have a query or
comment on this story, send an email to
news.feedback.asia@thomsonreuters.com))
