Oil rose above $103 a barrel on Wednesday as a weakening US dollar prompted some investors to shift money back into commodities and a strike disrupted operations at French ports.

The dollar fell after a drop in US durable goods orders and a 24-hour strike at French state-owned ports blocked Fos-Lavera near Marseille, France's largest oil and gas port, and the Nantes Saint-Nazaire port.

US crude rose $2.00 to $103.22 a barrel by 1401 GMT, extending the 36-cent gain on Tuesday. It has fallen from a record high of $111.80 reached on March 17. London Brent added $1.55 to $102.15.

The market is now shifting its focus to the weekly US government report on oil inventories to be released at 1430 GMT. Analysts expect the report to show a third consecutive increase in crude stocks.

"We have come down from $111 so a bounce is not surprising," said Harry Tchilinguirian, oil analyst at BNP Paribas. "Yet, this afternoon, if the crude stocks surprise to the upside, we can easily move lower."

The dollar slid after data showed that new orders for long-lasting US-made manufactured goods unexpectedly fell 1.7 per cent during February, supporting oil and other commodities.

Gold, which like crude oil is used by investors as a hedge against inflation, earlier on Wednesday hit a one-week high and industrial metals such as copper also gained.

French port and dock workers started the strike at 0500 GMT at French state-owned ports to protest against government plans to privatise the loading activities of seven out of nine of the public ports.

The strike was giving a lift to gas oil futures, the benchmark for diesel and heating oil in Europe, traders said. Gas oil was up 2.6 per cent at $932.75 a tonne.

"The immediate trend still looks lower but we're having a bit of a rebound," said Tony Machacek, an oil broker at Bache Commodities Ltd.

Analysts said a workers' strike in Gabon that had halted 60,000 barrels of daily output from a Shell subsidiary in the West African nation also encouraged oil's gains.

There was also a possibility that Iraq's oil output could be affected by violence in the country's south.

Oil production and exports from the southern oilfields could be disrupted in three days if workers cannot reach their offices due to fighting in Basra, a Southern Oil Company official said.  (Reuters)