US oil prices seesawed on Monday, supported by a strike at France's top oil port and disruptions to Houston petrochemical shipping, while a dollar bounce and Wall Street weakness kept gains in check. The strike at French port Fos-Lavera entered its eighth day, blocking dozens of oil tankers, trimming some refinery output and firming European fuel prices.
The Houston Ship Channel will not reopen until Tuesday night at the earliest after a barge struck an electrical tower early on Sunday, the US Coast Guard said. US crude for November delivery rose 10 cents or 0.12 percent to $81.68 per barrel by 12:34 pm EDT (1634 GMT), after reaching a nearly two-month high at $82.38. Strong US gasoline futures, reacting to the problems at the French and Houston ports, also supported crude prices. ICE Brent November crude slipped 16 cents or 0.19 percent to $83.59 a barrel.
"The Houston Ship Channel problem seems to be the main reason crude is higher. Traders are pricing in that import disruption and the French port strike is also supporting," said Phil Flynn, analyst at PFGBest Research in Chicago. Sunday's accident downed a power line across part of the channel leading to Houston's port. The Coast Guard said four refineries were affected, but Exxon's huge, 565,500 barrel-per-day Baytown, Texas, refinery suffered no impact.
Helping to limit oil's strength, the US dollar recovered from early declines as renewed concerns about the financial stability of peripheral eurozone countries hit the European single currency. Bad news from Ireland, Portugal and Greece overshadowed concerns the Federal Reserve may further ease US monetary policy, a move expected to weaken the US currency. A stronger dollar can weigh on dollar-denominated oil prices because it weakens the buying power of holders of other currencies. Adding to the cautious sentiment, US stocks fell about 1 percent after a brokerage downgrade of Microsoft and new capital rules set by Switzerland revived worries about the European banking system.
Swiss regulators will require global banks UBS AG and Credit Suisse to hold far more capital than their international rivals to prevent a crisis. Wall Street was digesting mixed US economic data. Pending sales of previously owned US homes rose more than expected in August to a four-month high, the National Association of Realtors said.
Another report showed new US factory orders fell slightly more than expected in August, as demand for transportation equipment dropped sharply. Excluding the transportation segment, orders rose 0.9 percent. Copper eased back on the dollar's strength after touching a more than two-year peak in the previous session. Oil gained support early on Monday after a Sunday report from Chinese state television that China's gross domestic product is forecast to rise 9.5 percent in 2010, accelerating from 9.1 percent in 2009. That followed strong manufacturing data from China and an upward revision to US economic and jobs data last week, helping US crude oil jump 6.65 percent for the week, the best weekly gain in nearly 7-1/2 months.