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NEW YORK: Oil prices slipped on Tuesday under pressure from a stronger dollar and ahead of weekly data on petroleum inventories in the United States, the world's largest energy consumer.
New York's main contract, light sweet crude for April delivery, dropped 38 cents to close at 81.49 dollars a barrel.
In London, Brent North Sea crude for April delivery shed 56 cents to settle at 79.91 dollars a barrel.
Analysts said the sell-off came in response to a firmer dollar, which makes dollar-priced oil more expensive for buyers using weaker currencies.
The euro fell as low as 1.3537 dollars on Tuesday as investors sought the safe-haven dollar after ratings agencies warned about deteriorating credit quality in Europe.
The New York benchmark contract fell as low as 80.16 dollars, testing the 80-dollar threshold, before recovering slightly in line with Wall Street equities.
Traders were waiting for the US government's Department of Energy (DoE) weekly inventories report on Wednesday for signs on the direction of demand in the world's biggest economy.
"The dollar is stronger and people are looking ahead to the DoE stats," said Andy Lipow, president of Lipow Oil Associates.
"Over the past several weeks, we've seen oil prices rise with stock markets... But it still has to translate in higher demand in the US and some part of Europe," said Lipow.
"The reality of slow demand recovery is starting to influence prices again," he added.
Mike Fitzpatrick at MF Global agreed, saying that current oil demand "can hardly be thought to be giving indications that more can be readily absorbed." At Monday's close, the New York barrel had climbed for seven consecutive sessions and in intraday trading had hit its highest level since January 11, at 82.41 dollars.
But the futures contract struggled to hold on to levels that had been supported by euphoria over better-than-expected US jobs data published last Friday.
"The US economy is on the road to recovery and we expect a gradual pick-up in the US energy demand ahead of the US summer driving season," said VTB Capital analyst Andrey Kryuchenkov.
The US driving season begins in May as summer vacations get underway, inspiring road trips for many.
Nic Brown at Natixis said the recent strike at French oil giant Total could contribute to reduce exports of European gasoline.
The strike may impede "the normal arbitrage of transatlantic gasoline exports ahead of the US driving season," he said.
"The strike, combined with other shutdowns and maintenance-related outages at European refineries, could reduce the exports of European gasoline, leaving the US more reliant upon Indian and other refineries." - AFP/de
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