* U.S. consumer prices rise less than expected
* Tensions persist over Iran nuclear program
* Total refiners strikes continue
(Recasts, adds detail, updates prices, changes dateline from
LONDON)
By Edward McAllister
NEW YORK, Feb 19 (Reuters) - Oil prices rose toward $80 a
barrel on Friday as French refinery strikes and tensions about
Iran's nuclear program outweighed fears that U.S. monetary
tightening could slow demand growth in the world's largest oil
consumer.
The Federal Reserve on Friday poured cold water on
speculation that a surprise hike to its emergency lending rate
on Thursday signaled a change in monetary policy.
[] Oil prices initially had fallen after the Fed
raised its discount rate by a quarter percentage point to 0.75
percent.
On Friday, U.S. crude for March delivery <CLc1> rose 67
cents to $79.73 a barrel by 12:01 p.m. EST (1701 GMT), after
earlier falling by more than $1 to a low of $77.76 a barrel.
In London, ICE Brent crude for April <LCOc1> rose 21 cents
to $77.99 a barrel.
Support for prices came as workers at Total's French
refineries continued their strike action, raising concern about
fuel supplies in the coming days. []
"The Federal Reserve's Dudley is trying to downplay
yesterday's discount rate hike, reassuring that it is not the
beginning of tighter rate policy," said Tom Bentz, analyst at
BNP Paribas Commodity Futures Inc in New York. "Also the French
refineries began their shut-downs due to strike."
New York Federal Reserve President William Dudley said on
Friday U.S. economic growth would likely be modest, keeping price pressures under wraps and enabling the Fed to keep
benchmark interest rates ultra-low for an extended period.
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For a graphic on the impact of the Fed rate hike on
commodities, see:
http://graphics.thomsonreuters.com/0210/CMD_RTHK0210.gif
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Tension about Iran's nuclear program was also a supporting
factor. Russia's foreign minister on Friday reportedly said
that Moscow was very concerned about Iran's lack of cooperation
with the U.N nuclear agency. []
Oil investors have looked to wider economic data over the
past year for signs of economic recovery and a potential
rebound in energy demand.
U.S. consumer prices rose just 0.2 percent in January -- a
move that reassured investors that the loose monetary policy
that has helped pull the world's largest economy out of
recession and stoked fuel demand was likely to last.
[] []
U.S. stocks pared losses and the Dow Jones index briefly
turned positive on Friday as the consumer price data outweighed
concerns about the Fed announcement. []
Oil prices have firmed gradually from lows of near $30 a
barrel in December 2008 to the current range between $70 and
$85 a barrel as low lending rates have spurred growth and
encouraged investors to pour funds into commodities as a hedge
against future inflation.
While the benchmark Federal funds rate was left unchanged
at near zero, the decision to increase the rate the Fed charges
banks for emergency loans raised concerns earlier that U.S.
monetary policy could begin to shift.
Last Friday, China's central bank said it would lift bank
reserve requirements in an unexpected tightening move that
could slow demand in the world's No. 2 fuel consumer.
[]
(Additional reporting by Robert Gibbons and Gene Ramos in New
York, Emma Farge in London, Seng Li Peng in Singapore; Editing
by Walter Bagley)
