* French strike hits shipping, fuel output, lifts oil
* Early strong dollar weighs, but pared gain supportive
* Coming up: API inventory data at 4:30 p.m. EDT Tuesday
(Recasts, updates with settlement prices, market activity)
By Robert Gibbons
NEW YORK, Oct 18 (Reuters) - Oil prices rose above $83 a
barrel on Monday, the biggest percentage gain in two weeks, as
a strike in France tightened fuel supplies and the dollar
pulled back from early gains.
The dollar's early strength had pressured oil, but the
greenback later gave up gains against the euro <EUR=> and a
basket of currencies <.DXY> adding spring to the oil price
bounce.
The dollar has had difficulty holding on to gains as
investors remain convinced that the U.S. central bank will pump
more money into the economy to lend support to a faltering
recovery.
U.S. crude for November <CLc1> delivery rose $1.83, or 2.25
percent, to settle at $83.08 per barrel. In London, ICE Brent
December crude <LCOc1> rose $1.92, or 2.33 percent, to settle
at $84.37 a barrel.
"The French strike at Fos-Lavera oil port is supportive for
U.S. refined products as it threatens U.S. imports and that has
also helped pull up crude futures," said Andy Lebow, broker at
MF Global in New York.
Nationwide strikes over pension reforms in France have
spread to the country's 12 oil refineries over the past seven
days, adding to the impact of a three-week strike at France's
largest oil port, Fos-Lavera. []
France began to tap emergency fuel reserves as strikes by
refinery and port workers continued and a growing number of
fuel stations began to run dry.
"RBOB (gasoline) and heating oil (futures) are up on the
French strike. There is an expectation the U.S. will be
exporting more gasoline and distillate and that cargoes from
Europe will not be coming here," said Phil Flynn, analyst at
PFGBest Research in Chicago.
U.S. gasoline <RBc1> and heating oil futures <HOc1>, the
distillate benchmark, also rose 2 percent as the French strikes
continued to hit fuel production in the region.
Crude oil prices fell early on Monday to below $81 a barrel
as the U.S. dollar enjoyed its own bounce, coming back from a
10-month low against a basket of currencies as investors
trimmed bearish bets against the greenback due to uncertainty
over the extent and impact of further monetary easing.
U.S. Federal Reserve Chairman Ben Bernanke on Friday gave
his most explicit signal yet that the U.S. central bank was set
to loosen monetary policy further in a debt purchase program
described as a second round of quantitative easing, or QE2, but
he gave no details about the Fed's next step.
The Federal Reserve next reviews policy on Nov. 2-3, when
details about any stimulus moves and their implementation might
emerge.
A Federal Reserve report on Monday said U.S. industrial
production fell in September, against analyst expectations it
would rise, while capacity utilization eased slightly. The
report was viewed as supportive to the expectation there will
be more monetary easing. []
U.S. stocks advanced, led by gains in financial companies
as Citigroup reported stronger-than-expected profits and
concerns about lenders' home foreclosure problems eased. []
Oil prices moved back above $80 this month on optimism a
boost to the U.S. economy would improve weak fuel demand but
the rally lost steam at the end of last week and oil finished
lower on a weekly basis.
Concerns about high U.S. oil inventories and tepid demand
have also kept oil prices in check. A Reuters analyst survey on
Monday yielded a forecast for crude oil stockpiles to have
risen last week on an import rebound, while refined products
stocks fell. []
Weekly oil inventory data from the American Petroleum
Institute, an industry group, will arrive late on Tuesday, with
the government's report from the U.S. Energy Information
Administration is set for a Wednesday morning release.
(Additional reporting by Gene Ramos in New York and Isabel
Coles and Joe Brock in London; Editing by Lisa Shumaker)
