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NEW YORK: Oil prices dropped on Thursday, pressured by a strengthening dollar, economic recovery concerns and a decline in natural gas prices.
New York's main contract, light sweet crude for delivery in April, fell 66 cents to close at 80.21 dollars a barrel.
London's Brent North Sea crude for April lost 71 cents, settling at 78.54 dollars.
"The dollar is very strong today," said Ellis Eckland, an independent analyst.
The US currency gained almost one percent against the embattled euro, which suffered from persistent concerns about eurozone member Greece's debt crisis and doubts about the strength of economic recovery that were heightened by disappointing US data.
Pending sales of US homes plunged in January while industrial orders rose less than expected, numbers that dented the market's outlook on oil demand.
The dollar's rebound made greenback-priced oil more expensive for buyers using weaker currencies, weakening demand for crude that depresses prices.
"Buyers are carrying the market, but on hopes and wishes, not solid fundamentals," said Mike Fitzpatrick at MF Global.
Fitzpatrick and other analysts predicted that the highly anticipated US government report on Friday on the unemployment situation in February will be worse than expected.
"The jobs number tomorrow, we fear, is going to disappoint," he said. "Expectations are for a loss of 'only' 50,000-60,000, it will probably be considerably more."
Traders were also on edge as they awaited what they hope will be a concrete European initiative to help Greece through its crippling debt and public deficit crisis.
The oil market also came under pressure from the natural gas market, where prices have tumbled to three-month lows after inventories fell less than expected.
The benchmark New York oil futures contract gave back about half of the gains it had wracked up on Wednesday, when it posted its highest close since January 11 as the market cheered a largely encouraging US Department of Energy report on US petroleum stockpiles.
Crude oil reserves rose for the seventh week running in the week ending February 26, the DoE said, and the increase of 4.1 million barrels was four times bigger than the consensus forecast.
But traders focused on a sharper-than-expected decline in distillates, which include diesel and heating fuel, which dropped 800,000 barrels, and a pick-up in refinery use after weeks of weakness, to 81.9 percent of capacity.
In addition, demand for petroleum products, on a four-week moving average, rose to 19.3 million barrels per day, an increase of 3.0 percent from a year ago. - AFP/de
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