* U.S. consumer confidence falls to 10-month low in Feb
* German business morale drops suggests Q1 shrinkage
* U.S. crude oil stocks expected to rise
* Total pledges no refinery closures, strike end in sight
(Updates prices, poll ahead of U.S. inventory data, details
on French refiner strike)
By Matthew Robinson
NEW YORK, Feb 23 (Reuters) - Oil prices dropped nearly 2
percent to below $79 a barrel on Tuesday, breaking a five-day
rally, as a fall in U.S. consumer confidence and German
business sentiment sent investors into safer havens, such as
the dollar.
U.S. crude futures for April <CLc1> settled $1.45, or 1.81
percent, lower at $78.86 a barrel. The March contract, which
expired on Monday, hit $80.51 during its last day of trading,
the highest price for a front-month contract since Jan. 13.
In London, Brent crude <LCOc1> fell $1.36 to settle at
$77.25 a barrel.
U.S. consumer confidence fell in February to the lowest
level in 10 months as consumers' short-term outlook for the
jobs market worsened, according to a report by the Conference
Board, an industry group. []
German business sentiment fell for the first time in almost
a year in February, suggesting a harsh winter may send Europe's
largest economy sliding back into contraction in the first
quarter. []
The dollar accelerated gains against the euro after
markets, already keyed up for testimony from the U.S. Federal
Reserve chief later this week, saw sinking U.S. consumer
confidence as a red light for risk. []
Caution ahead of testimony from Federal Reserve Chairman
Ben Bernanke on Wednesday also cut demand for risk. Bernanke
will give his semiannual testimony on monetary policy and the
state of the economy before the House Financial Services
Committee.
"The overarching, unavoidable, inescapable fact is that
consumers are still reeling from the effects of the greatest
economic calamity of most of their lifetimes," Mike
Fitzpatrick, vice president at MF Global in New York, said in a
research note.
"They have been forced to deleverage in the face of
possible job loss and foreclosure. Until they begin to return
to work, economic growth is going to be grindingly slow and so
will energy demand growth."
The market was awaiting U.S. oil stocks data due later on
Tuesday and on Wednesday morning. An updated Reuters poll of
analysts forecast the data will show a rise of 2.0 million
barrels in crude oil inventories last week, the fourth weekly
rise in a row as imports continued to increase. []
Gasoline stockpiles were seen rising 400,000 barrels in the
week to Feb. 19, while distillate inventories were forecast to
have fallen by 1.6 million barrels.
The American Petroleum Institute, an industry group, was
due to release its weekly oil data for the week to Feb. 19 at
4:30 p.m. EST (2130 GMT) on Tuesday, with data from the U.S.
Energy Information Administration due on Wednesday at 10:30
a.m. EST (1530 GMT).
Further easing came on signs a strike by French refiners
could come to an end. French energy giant Total <TOTF.PA>
pledged not to close or sell any refineries in the European
country, other than its Dunkirk plant, for five years, which
unions say clears the way to end a strike that has embarrassed
the government ahead of regional polls. []
(Reporting by Gene Ramos, Robert Gibbons and Matthew Robinson
in New York; Ikuko Kurahone and Christopher Johnson in London
and Alejandro Barbajosa in Singapore; Editing by Marguerita
Choy)
