* 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
(Updates prices, adds China and Mexico)
By Seng Li Peng
SINGAPORE, March 22 (Reuters) - Oil fell towards $80 on
Monday, extending the previous session's near 2 percent drop,
dragged by a firmer dollar on nagging worries over Greece's
debt while a surprise rate rise by India stoked concerns over
demand.
However, fears of continuing global oversupply are
countered by the decline in China's fuel exports in February
and implied oil demand rose, as 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, slid for the third-straight session, down 47 cents
to $80.21 a barrel at 0638 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 33 cents to
$79.55 a barrel.
This month, oil has managed to top $83 four times, but has
failed to hold the gains, partly stemming 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 0.2 percent to around 80.88 <.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 an 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 last week's unexpected increase
in Indian interest rates. []
A firmer greenback 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.
Implied oil demand in the world's second-biggest energy
user rose 19.4 percent in February over a year earlier, where
it consumed 8.65 million barrels of oil per day, though real
demand growth has been undercut by swelling stocks.
[]
It also soaked up more gasoline, marked by a 28 percent
fall in February exports against a year ago 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 slid by 11.8 percent last month from a year
earlier to 290,000 tonnes. The drops turned China back into a
net fuel importer after being a net exporter in both January
and December. []
Some support may also come from Mexico, where all three of
its main oil-exporting ports on the Gulf of Mexico were shut on
Sunday due to bad weather. []
(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
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