* Rally fed by talk of economic stimulus loses steam
* Firmer U.S. dollar adds pressure
* Coming Up: U.S. industrial output for Sept; 1315 GMT
(Updates throughout, previous SINGAPORE)
By Joe Brock and Isabel Coles
LONDON, Oct 18 (Reuters) - Oil on Monday hit its lowest in a
week, below $81 a barrel, pressured by uncertainty over the U.S.
economic outlook and as the battered dollar rallied.
Federal Reserve chief Ben Bernanke cemented expectations of
more U.S. monetary easing on Friday but his comments lacked
detail, raising doubts over the impact the measures will have on
the economy of the world's largest fuel consumer.
U.S. crude for November <CLc1> fell 74 cents to $80.51 by
0841 GMT, extending last week's drop of 1.7 percent. It touched
$80.30 on Oct. 8, the lowest price since the beginning of the
month, after reaching a five-month high of $84.43 a day earlier.
December ICE Brent <LCOc1> fell 72 cents to $81.73.
The U.S. dollar bounced from a 10-month low against a basket
of currencies on Monday, as investors trimmed bearish bets
against the greenback on some uncertainty how much easing the
Federal Reserve will implement. <.DXY>
A stronger dollar makes commodities, like oil, more
expensive for buyers using alternative currencies.
U.S. Federal Reserve Chairman Ben Bernanke on Friday offered
his most explicit signal yet that the U.S. central bank was set
to ease monetary policy further in a debt purchase programme
described as a second round of quantitative easing, or QE2.
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.
"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," said Christophe Barret, oil analyst at
Credit Agricole.
The Fed next reviews policy on Nov. 2-3, when details about
any stimulus moves and their implementation could emerge.
U.S. industrial output numbers will be carefully eyed later
on Monday after data at the end of last week highlighted the
fragile state of recovery in the world's largest economy.
U.S. inflation unexpectedly slowed in September, despite a
pickup in retail sales, the government said on Friday. A survey
showed the country's consumer sentiment unexpectedly dipped in
early October to its weakest level since July. []
DOLLAR DRIVES MARKET
The dollar strengthened by almost 0.5 percent against a
basket of currencies on Monday, extending Friday's gains from
10-month lows. Technical indicators pointed to the possibility
of a further short-covering rebound. []
In France, President Nicolas Sarkozy faces a make-or-break
week for his unpopular pension reform as rail and refinery
workers, truck drivers and street protestors ramp up pressure to
scrap it before a crucial Senate vote.
A three-week old strike at the French oil hub of Fos-Lavera
is blocking 61 ships from unloading cargo, the port authority
said on Sunday. []
"Everybody will be looking at the developments in France to
understand whether or not they will renew supply of fuel in the
coming days or not, I think that is really the main element and
the main uncertainty in the market right now," Barret said.
Key oil producer Saudi Arabia is holding a conference in
Riyadh on Monday to mark the 50th anniversary of the
Organization of the Petroleum Exporting Countries (OPEC), which
the kingdom's oil minister Ali al-Naimi is scheduled to attend.
OPEC secretary general Abdullah al-Badri said on Friday that
and oil price between $75-$85 would not hinder global economic
recovery but said the group was concerned about the value of the
dollar. []
(Editing by Keiron Henderson)
