* Dollar down 0.17 percent against currency basket
* France refinery strike enters sixth day
* Chinese refinery processing in Jan rises 29 pct on year
(Updates prices)
By Alex Lawler
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 assessed the prospect of an
earlier U.S. interest rate rise than previously expected.
An oil refinery strike in France entering its sixth day, a
report of rising crude oil processing in world no. 2 oil
consumer China in January and tensions over Iran's nuclear
programme also supported prices.
U.S. crude for March delivery <CLc1> rose 15 cents to $79.96
a barrel by 1152 GMT. It earlier reached $80.51 -- the highest
for a nearby contract since Jan. 13. Brent crude <LCOc1> for
April rose 17 cents to $78.36.
"Sceptical 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 came under pressure from easing fears over
potential U.S. interest rate rises, and as talk of a bailout for
debt-ridden Greece underpinned the euro. []
A weaker dollar makes crude and other dollar-denominated
commodities cheaper for holders of other currencies and tends to
support oil prices. Gold climbed to a one-month high.
Some investors have taken the view that the rally to $80 was
overdone, analysts said. The market's peak so far in 2010 is
$83.95 reached on Jan. 11.
"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."
STRIKE
Workers at Total's French refineries continued strike
action, raising concern about fuel supplies and supporting the
price of refined products such as gasoil.
The 339,000-barrel-per-day Gonfreville refinery will halt
production fully late on Tuesday due to the strike, the CGT
union said. Four other Total refineries are in the process of
halting production. []
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 rose 7.7 percent last week, the largest single-week
percentage gain since October. Money managers boosted their net
long crude futures position on the New York Mercantile Exchange
in the week through Feb. 16. []
More data emerged from China suggesting strong demand. The
China Petroleum and Chemical Industry Association (CPCIA) 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. []
(Reporting by Alex Lawler and Fayen Wong in Perth; Editing by
Keiron Henderson)
