* Euro zone debt contagion risk helps pressure commodities
* Dollar index bounces, euro retreats, pressuring oil
* Coming up: API oil inventory data, 4:30 p.m. EST Tuesday
(Corrects first paragraph to refer to stronger dollar; update
recasts, updates prices and market activity, new byline and
changes dateline from previous LONDON)
By Robert Gibbons
NEW YORK, Nov 22 (Reuters) - Oil prices fell on Monday,
pressured by a stronger dollar and erasing early gains as
optimism over a debt bailout for Ireland gave way to concerns
that financial problems would spread to other euro zone
countries.
U.S. gasoline futures also slumped, extending the pressure
on crude futures amid expectations that refinery restarts and
imports from Europe will relieve tight supplies in the New York
Harbor region, the delivery point for the U.S. gasoline futures
contract.
U.S. crude for January delivery <CLc1> fell $1.22 to $80.75
a barrel at 12:47 p.m. EST (1747 GMT).
In London, ICE January Brent crude <LCOc1> fell $1.20 to
$83.14 a barrel.
"Crude oil is down in reaction to the dollar, which is
firmer," said Phil Flynn, analyst at PFGBest Research in
Chicago.
"There is concern about contagion in the euro zone, and
that's keeping the market on edge. But volume is light ahead of
the Thanksgiving holiday."
The euro slumped against the dollar as optimism over an
Irish bailout faded, prompting a euro retreat from a one-week
high reached earlier in the session on news of the rescue
deal.
The European Union and International Monetary Fund agreed
on Sunday to help bail out Ireland with loans to tackle its
banking and budget crisis after the country formally requested
aid. The deal is expected to total 80 billion to 90 billion
euros ($109.8-$123.6 billion). []
A stronger dollar typically pressures oil and commodities
prices as it caps investor appetite for riskier assets and
boosts the value of greenbacks paid to producers for
dollar-denominated oil while making it more expensive for
consumers with other currencies.
In addition to the problems in Europe that could threaten
oil demand, oil investors remain cautious amid concerns China
will do more to cool inflation even after last week's increases
in bank reserve requirements. []
"There are also views that the bank reserve hikes, which
China has introduced recently, are not enough to curb
inflation," the Mizuho Corporate Bank said in a research note.
China is the world's No. 2 oil consumer and any slowdown in
its economy could dampen oil demand growth.
Copper prices also fell, on lower imports from top metals
consumer China and on the Irish bailout fluctuations. []
U.S. equities also were pressured by the turmoil of the
Irish bailout deal. []
U.S. GASOLINE EXTENDS SLUMP
U.S. gasoline futures prices <RBc1> extended their slump
from Friday on refinery restarts [] in the U.S.
Northeast.
Gasoline futures rose 3 percent on Thursday, a jump
attributed to the unexpectedly large drop in gasoline stocks in
the week to Nov. 12 reported by the government [] that
added to concerns about tight supplies in the New York Harbor.
"Gasoline is being pressured by refinery restarts. But
whether that relieves (supply) tightness right away remains to
be seen," said Tom Bentz, broker at BNP Paribas Commodity
Futures Inc in New York.
Also tempering gasoline prices were expectations that
imports to the region will be revived now that the recent
French port and refinery strikes are over.
EYEING SAUDI ARABIA
Elderly King Abdullah of Saudi Arabia, the world's top oil
exporter, flew to the United States on Monday for medical
checks for a back ailment, and Crown Prince Sultan returned
from a holiday abroad. []
A Saudi oil industry official told Reuters on Monday that
$80 per barrel was a good price for oil under current market
conditions. []
The remarks were in line with those earlier this month from
Saudi Oil Minister Ali al-Naimi, who said prices between $70
and $90 a barrel were comfortable for consumers, a shift from
previous remarks stating $70-$80 was the ideal range.
(Additional reporting by Gene Ramos in New York, Ikuko
Kurahone in London, Florence Tan and Luke Pachymuthu in
Singapore; editing by Jim Marshall)
