Oil slips to $80 a barrel on back of stronger dollar

OIL PRICE: US crude oil futures fell $1.26 to $80.11 a barrel by 0852 GMT. (Getty Images)

Oil slipped towards $80 on Thursday as a stronger dollar encouraged investors to lock in profit from a 12-month high hit on Wednesday.

US crude oil futures fell $1.26 to $80.11 a barrel by 0852 GMT. London Brent crude fell $1.09 to $78.60.

On Wednesday, US crude surged to $82, the highest price since October last year, as weekly US government oil data showed a large drop in gasoline inventories over the last week, and fuel demand rising about 4 percent year-on-year.

But absolute oil inventory levels remained high globally due to slack demand. As the dollar bounced from the low against euro and the basket of currencies, it weighed oil prices, analysts said.

"It is becoming almost imperative to trade the commodity markets from the perspective of the dollar these days, as nothing else seems to count for very much," MF Global wrote in a research note.

In a long term, however, analysts said the dollar was still on a downward trend because of generally positive earnings and the view that US interest rates will remain low.

"Energy bulls seem to be blindly betting on continued weakness in the dollar to fuel further gains, apparently ignoring the fact that almost everything else on the horizon is bearish to neutral," MF Global said.

Technical indicators, based on the study of historic price graphs rather than supply and demand factors, also suggested further gains in oil.

Global investors also watched corporate earnings to see if hopes for economic recovery and a related surge in energy demand were well-founded.

Swiss bank Credit Suisse's third quarter profit topped forecasts. But World stocks as measured by MSCI and Europe's FTSEurofirst 300 fell due to poor earnings from other companies, such as mobile phone firm Ericsson. (Reuters)

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