* Dollar down 0.15 percent against currency basket
* France pledges will not allow disruption of oil supplies
* Chinese refinery processing in Jan rises 29 pct on year
(Previous PERTH, updates prices)
LONDON, Feb 22 (Reuters) - Oil held just under $80 a barrel
on Monday, paring much of an earlier gain to a six-week high,
with the dollar down as investors reassessed the prospect of an
earlier U.S. interest rate rise than previously expected.
An extended oil refinery strike in France, a report of
rising crude oil processing in China in January and tensions
over Iran's nuclear programme also supported prices.
U.S. crude for March delivery <CLc1> rose 7 cents to $79.88
a barrel by 0951 GMT. It earlier reached $80.51 -- the highest
since Jan. 13. Brent crude <LCOc1> rose 9 cents to $78.28 a
barrel.
"Skeptical as we are of the advance, we cannot fight the
current run higher as prices are now within striking distance of
their recent highs and likely on track to test them," said
Edward Meir, analyst at MF Global.
The dollar was weaker on Monday as investors reassessed
the Federal Reserve's broader interest rate intentions after
last week's surprise discount rate hike, prompting a degree of
recovery in risk appetite. []
A weaker dollar makes crude and other dollar-denominated
commodities cheaper for holders of other currencies and tends to
support oil prices.
The U.S. currency held slight gains versus the euro <EUR=>
and gained support from reports that Germany had prepared plans
under which countries using the single currency would provide
aid worth between 20 billion and 25 billion euros for Greece.
Workers at Total's French refineries continued their strike
action, raising concern about fuel supplies in the coming days.
The French government pledged to prevent any oil supply problems
in the country. []
Tension about Iran's nuclear work also provided support.
Iran has earmarked potential sites for new nuclear enrichment
plants and construction of two of them could begin this year, a
nuclear energy official said on Monday. []
Oil prices rose 7.7 percent on the week, their largest
single-week percentage gain since October, thanks to a
combination of positive economic data and growing tensions over
sanctions against Iran.
More supportive data emerged on Monday from China, the
world's second-largest oil consumer and probably the source of
much of this year's forecast growth in global oil demand.
The China Petroleum and Chemical Industry Association
(CPCIA) that said China processed 30.14 million tonnes of crude
in January, up 29 percent from a year earlier. []
Some think the rally has further to run. Goldman Sachs said
that benchmark oil prices will rise to $85-$95 a barrel this
year as global economic growth accelerates. []
Others are less convinced.
"Oil looked toppish at $80, that's the upper end of the
trading range," said Carsten Fritsch, analyst at Commerzbank.
"It's unlikely to see a level of $80 being sustained given
still-weak fundamentals. Physical demand is still lacklustre,
outside China at least."
(Reporting by Alex Lawler and Fayen Wong in Perth; Editing by
Keiron Henderson)
