* Dollar up against euro, consumer confidence 10 month low
* U.S. crude oil stocks expected to rise
* French refinery strike enters seventh day
By Ikuko Kurahone
LONDON, Feb 23 (Reuters) - Oil dropped below $79 on Tuesday,
breaking a five-day rally, as U.S. consumer confidence fell to a
10-month low and due to a jump in the value of the dollar.
U.S. crude futures for April <CLc1> fell $1.79 to $78.52 a
barrel by 1533 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 $1.73 lower at $76.88.
"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."
Risk aversion pushed up the dollar against the euro after
weak U.S. consumer confidence and housing data. []
U.S. consumer confidence fell in February to the lowest in
10 months, as consumers' short-term outlook for the jobs market
worsened, according to data from industry group the Conference
Board. []
The S&P/Case Shiller data showed a slightly
bigger-than-expected drop in U.S. home prices in December.
Commodities tend to move inversely to the U.S. currency
because many of them are priced in dollars.
Weak consumer confidence would keep oil demand, such as
gasoline, low in the United States, the world's top oil
consumer.
The market focus will shift to 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)
is due to release its weekly oil data for the week to Feb. 19 at
2130 GMT on Tuesday.
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 had made
some proposals and that progress had been made. []
(Additional reporting by Christopher Johnson in London and
Alejandro Barbajosa in Singapore; Editing by James Jukwey)
