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LONDON (AFP) –
World oil prices weakened on Thursday as a stronger dollar sapped investors' enthusiasm for crude, traders said.
New York's main futures contract, light sweet crude for April delivery, was down 42 cents at 79.58 dollars a barrel.
London's Brent North Sea crude for April delivery fell 33 cents to 77.76 dollars a barrel.
The European single currency sank against the dollar and yen on Thursday as investors sought safe-haven currencies amid the public finance crisis afflicting Greece.
A stronger greenback weighs on dollar-denominated crude because the commodity becomes more expensive for buyers holding weaker currencies.
The dollar is still "a very very important indicator" for the oil market, said Tetsu Emori, commodities fund manager at Astmax Investments, cited by Dow Jones Newswires.
The euro took a beating after a warning on Wednesday by Standard & Poor's credit ratings agency that it could downgrade Greece by one or two notches within the next month, dealers said.
New York crude had won 1.14 dollars on Wednesday after comments by Federal Reserve chairman Ben Bernanke helped weaken the greenback, sparking buying interest from investors holding stronger currencies.
Bernanke had said the US central bank would hold interest rates low for an extended period as the economic recovery gets on track.
The Fed chairman told the House of Representatives Financial Services Committee that he saw unemployment remaining stubbornly high, which will require the Fed to maintain its stimulative monetary policy.
"Bernanke delivered a very downbeat report on the US economy to Congress in which he predicted that US interest rates would remain exceptionally low for an 'extended' period," said PVM analyst David Hufton.
Prices also won support on Wednesday as traders digested some bullish elements in the US government's weekly oil inventories report.
The Department of Energy said US crude reserves jumped by three million barrels last week in the United States -- the world's biggest energy consuming nation -- suggesting weak demand.
But gasoline or petrol inventories fell, confounding market expectations for an increase.
Clarence Chu, an oil trader with Hudson Capital Energy in Singapore, said it was difficult to sustain oil prices at more than 80 dollars a barrel, given that global supplies still outpace demand.
"Sentiment has been bullish over these past couple of days," Chu said.
"But it hasn't been supported by the fundamentals. So I don't think oil will be supported at 80 dollars for the short term."
