Crude futures declined Thursday as the dollar strengthened and traders awaited weekly U.S. oil-inventory data.
Light, sweet crude for December delivery recently traded $1.11, or 1.4%, lower at $78.17 U.S. a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 89 cents, or 1.1%, lower at $77.06 U.S. a barrel.
The dollar rose against the euro after weaker-than-expected industrial production was reported for the eurozone. A stronger dollar makes oil more expensive to other currency holders. The direction of the dollar has been a major factor driving oil prices for much of this year.
"The dollar is up today and one of the main reason's why the market is lower," said Andy Lebow, senior vice president for energy at MF Global in New York.
Earlier, the International Energy Agency, or IEA, revised upward its forecast for global oil demand in 2010 by 140,000 barrels a day to 86.2 million barrels a day from its previous report.
World oil consumption is also expected to grow in the fourth quarter for the first time since mid-2008, based on rising demand from developing economies. The agency cautioned that further gains in crude prices could restrain the fragile economic recovery.
The oil market, however, had little response to the release of the IEA data, with analysts saying there was little net difference in the overall supply and demand picture. They noted that oil stocks globally are still brimming despite optimism of a future rise in oil consumption.
Weekly oil inventory data are at 11:00 a.m. EST from the U.S. Department of Energy. "The market is expecting a build so that's why oil is also down for the day," said Mr. Lebow.
Analysts surveyed by Dow Jones Newswires forecast a 200,000-barrel increase in crude inventories, no change in gasoline stocks and a 400,000-barrel decline for distillates, that included diesel and heating oil. Refinery processing is expected to rise 0.3 percentage points to 80.9% of total capacity.
Oil prices slipped on Tuesday after the American Petroleum Institute, an industry group, said oil stockpiles rose 1.2 million barrels last week, gasoline by 1.4 million barrels and distillates by 600,000 barrels.
Front-month December reformulated gasoline blendstock, or RBOB, recently traded 2.53 cents, or 1.3%, lower at $1.9674 U.S. a gallon. December heating oil recently traded 3.35 cents, or 1.6%, lower at $2.0223 U.S. a gallon.
