* Dollar extends gains against euro
* U.S. crude oil stocks expected to rise
* French refinery strike enters seventh day
By Ikuko Kurahone
LONDON, Feb 23 (Reuters) - Oil fell below $80 on Tuesday,
breaking a five-day rally, after the dollar jumped against the
euro and as expectations grew for a build in U.S. crude oil
stocks.
U.S. crude futures for April <CLc1> fell 95 cents to $79.36
a barrel by 1410 GMT. The March contract, which expired on
Monday, hit $80.51 during its last day of trading, the highest
for a front-month contract since Jan. 13.
Brent crude <LCOc1> was trading 88 cents lower at $77.73.
"The main trigger for the sharp fall in oil prices has been
the spike in the dollar, which was partly due to a disappointing
German Ifo index," said Carsten Fritsch, analyst at Commerzbank.
"The whole commodities complex is suffering from the rise in
the dollar. Oil fundamentals are also weak and prices have
become somewhat disconnected from the realities of supply and
demand."
The dollar started strengthening against the euro after an
unexpected fall in Germany's Ifo business sentiment index raised
questions over the health of Europe's biggest economy.
The U.S. currency extended gains after the S&P/Case Shiller
data showed a slightly bigger-than-expected drop in U.S. home
prices in December, prompting investors to cut exposure to risky
assets. []
Commodities tend to move inversely to the U.S. currency
because many of them are priced in dollars.
The market was also on edge ahead of U.S. oil stocks data,
which a Reuters poll suggested would show a rise of 1.9 million
barrels in crude oil inventories, the fourth weekly rise in a
row as imports continued to increase. []
U.S. industry group the American Petroleum Institute (API)
was due to release its weekly oil data for the week to Feb. 19
at 2130 GMT on Tuesday.
Analysts in a Reuters poll said they expected inventories of
middle distillates, including heating oil, to fall due to high
heating demand because of the extended cold in the U.S.
Northeast. []
FRENCH STRIKES
Oil prices took some support from strikes by French oil
workers, which could close more than half the country's refining
capacity.
Analysts said the strikes had raised concern over fuel
supply shortages, although refinery stoppages in general usually
translate into lower demand for crude oil.
Strikes at Total's <TOTF.PA> refineries entered their
seventh day as workers protested against company plans to shut
one of its six refineries permanently because of weak demand for
fuel. Output has stopped at all the refineries.
The strikes drew in President Nicolas Sarkozy, who met Total
Chief Executive Christophe de Margerie.
A union official said the French oil major promised not to
close or sell any French refineries for five years, while the
company declined to comment beyond saying the group has made
some proposals and that progress has been made. []
(Additional reporting by Christopher Johnson in London and
Alejandro Barbajosa in Singapore; Editing by Amanda Cooper)
