* U.S. manufacturing sector up less than expected in Feb
* Traders await key U.S. jobs data this week
* Coming up: API crude inventory report on Tuesday
(Updates with background on crude stocks paragraph 18)
By Edward McAllister
NEW YORK, March 1 (Reuters) - Oil fell more than 1 percent
to below $79 a barrel on Monday as investors sold off an early
rally and the dollar strengthened against the euro.
Crude had staged an early advance, but lost steam above
$80, near the top of a range seen over the past few months.
The dollar rose against the euro and the pound, adding
pressure to crude, as markets remained concerned about
sovereign risk issues in Europe including a bailout package for
debt-strapped Greece. []
U.S. crude for April delivery <CLc1> fell 96 cents to
settle at $78.70, after climbing as much as 96 cents. On
Friday, the contract settled up $1.49 at $79.66 and in February
posted its biggest monthly percentage gain since May 2009.
London Brent crude <LCOc1> fell 70 cents to settle at
$76.89.
"We're seeing some reallocation to short positions and the
euro's weakness also was part of it and after the strong
February you had the failure to push above $81," said Richard
Ilczyszyn senior market strategist at Lind-Waldock in Chicago.
Prices have traded in a range between $69 and $84 a barrel
since last October, but $80 a barrel is being reinforced as a
key resistance level, analysts said.
Investors have looked to wider economic data over the past
year for signs of economic recovery and a potential rebound in
energy demand.
The U.S. manufacturing sector grew in February but at a
slower rate than expected, according to an industry report
released on Monday. []
The Institute for Supply Management (ISM) said its index of
national factory activity declined to 56.5 in February from
58.4 in January. The median forecast of 80 economists surveyed
by Reuters was for a reading of 57.5.
The rise in the dollar helped pressure crude. Oil prices
have often fallen this year when the dollar firms, making crude
more costly for holders of other currencies. A stronger dollar
can also signal investors plowing funds into safe havens and
away from assets considered more risky, including commodities.
COPPER COMMODITY
Oil rallied in early trade on a combination of bullish
sentiment and a rise in copper futures following a massive
earthquake on Saturday in Chile, the top producer of the
indispensable industrial metal. []
Chile's state energy company ENAP said it was boosting
diesel imports after two of its oil refineries -- Aconcagua and
Bio Bio with a combined capacity of 220,000 barrels per day --
were damaged in Saturday's quake.
On Sunday a senior military official from Iran, the world's
fourth-largest exporter of crude, said the country could make
European nations suffer by cutting off energy supplies and
could target any adversary with its missiles. []
Iran is disputing its nuclear energy program with the
United States and its allies, who say it is aimed at developing
weapons. Tehran says it is only interested in power generation
and medical research.
Oil traders will look to economic reports this week, with
key focus on U.S. jobless data on Friday, that should give more
clues on consumer spending, and U.S. home loans on Wednesday.
The American Petroleum Institute will release its weekly
crude inventory report on Tuesday, followed by the EIA's report
on Wednesday. According to a preliminary Reuters poll of
analysts, crude stocks rose by 1.3 million barrels last week,
while distillate stocks fell by 600,000 barrels and gasoline
stocks rose by 400,000 barrels. []
EIA data released last week showed crude stocks rose by 3
million barrels in the week ending Feb. 19, a bigger rise than
analysts had expected.
(Additional reporting by Robert Gibbons and Gene Ramos in New
York; Chris Baldwin in London; Fayen Wong in Perth; Editing by
Lisa Shumaker)
