* China rate hike lifts dollar, could curb oil demand
* Dollar strengthens broadly, pressures oil
* Coming up: API inventory data at 4:30 p.m. EDT Tuesday
(Recasts, updates prices, market activity, changes byline
and moves dateline from previous LONDON)
By Robert Gibbon
NEW YORK, Oct 19 (Reuters) - Oil fell more than 2 percent
on Tuesday, the biggest drop in nearly two months as the dollar
rose after China's central bank boosted interest rates for the
first time since 2007 to curb inflation in its booming
economy.
The specter of China's dynamic economic growth and thirst
for oil being slowed sent oil and other commodity prices lower
and caused investors to to cut exposure to risk by selling the
euro and commodity-sensitive Australian dollar and buying the
U.S. dollar.
U.S. crude for November <CLc1> delivery fell $1.84, or 2.21
percent, to $81.24 per barrel by 12:18 p.m. EDT (1618 GMT), on
track to post the biggest percentage loss since late August.
Tuesday's slide was on track to wipe out all or most of the
2.25 percent price jump the previous session and comes a day
before the expiration of the U.S. November crude contract.
In London, ICE Brent December crude <LCOc1> fell $1.63, or
1.93 percent, to $82.74 a barrel.
"This dollar-driven move has pulled down prices across the
board in the oil markets," said Tom Knight, a trader at Truman
Arnold in Texarkana, Texas.
Comments late on Monday by U.S. Treasury Secretary Tim
Geithner that the United States would not engage in competitive
currency devaluation also helped the dollar rise.
[]
A stronger dollar can pressure oil prices by making
dollar-denominated oil more expensive to users of other
currencies and by pulling investment into foreign exchange
markets from commodities that are viewed as riskier bets.
"(The Chinese rate move) could imply a little bit of softer
growth in commodities demand," said UniCredit's Jochen
Hitzfeld.
Copper retreated from 27-month highs on the interest rate
hike by top metals consumer China, though analysts said copper
looked well underpinned in the longer-term thanks to tightening
supply. []
FRENCH STILL ON STRIKE
Energy investors continued to gauge the impact of a 23-day
strike at France's Fos-Lavera oil port and shut refineries that
forced the French government to tap emergency fuel reserves
this week. []
Port officials said 47 oil tankers were blocked at the port
[] and workers continued strikes at all of France's
12 oil refineries, according to a CGT union official.
[]
"Major supply disruptions historically mean higher prices
-- even for crude oil when the disruption is caused by refinery
problems," said Philip Wiper, an analyst at oil brokerage PVM.
After U.S. refined products futures prices roared higher
with crude oil on Monday as the French strikes dragged on, RBOB
gasoline <RBc1> and heating oil <HOc1>, the distillate
benchmark, pulled back sharply on Tuesday.
"Gasoline is leading losers probably because they were the
top gainers in recent sessions, which tells you there is
profit-taking going on from recent highs," Knight said.
Investors will be getting a snapshot of U.S. inventories
from weekly reports from industry and government, starting with
the report from industry group the American Petroleum Institute
at 4:30 p.m. EDT (2030 GMT) on Tuesday.
U.S. crude stockpiles were expected to have risen last
week, a Reuters survey on Monday showed, while oil products
stockpiles were expected to have tightened. []
The more closely watched oil inventory report from the U.S.
Energy Information Administration is set for release at 10:30
a.m. EDT (1430 GMT) on Wednesday.
(Additional reporting by Gene Ramos in New York, Zaida Espana
and Isabel Coles in London and Alejandro Barbajosa in
Singapore; Editing by Lisa Shumaker)
