Oil eased to just above $75 a barrel today, pressured by a firmer US dollar on growing disappointment among investors over the lack of details from the European Union summit to help debt-laden Greece.
European leaders sought to prop up Greece with words of support at a summit yesterday, but failed to offer concrete proposals to help the country tackle its debt crisis, prompting a negative market reaction.
US crude for March delivery fell 25 cents to $75.03 a barrel by 0620 GMT, after settling 76 cents higher at $75.28 a barrel yesterday. London Brent crude for the new front month of April fell 28 cents to $73.84.
Despite today's dip, oil is on track for a 5.4 per cent rise this week, its best weekly gain in six weeks, led by signs of higher heating demand due to US snowstorms, a bullish global oil demand forecast from the US Energy Information Administration (EIA) and initial hopes over the Greek bailout.
"There's a lot of scepticism in the market about the EU summit, because there's no definitive plan - only political and moral support - so that's boosting the dollar and pressuring oil," said Michelle Kwek, an analyst at Informa Global Markets in Singapore.
"Markets are still very much on edge, and that's going to be the main factor driving prices over the next week."
A deal to provide financial aid to Greece to stave off a broader crisis in the 16-nation region would be unprecedented, riding roughshod through rules forbidding a bailout.
But the rhetorical promises of support were not enough to satisfy financial markets, which are looking for specifics on how Athens may be helped out of its debt and deficit spiral.
In Asian trade, the euro was quoted at about 1.3665, down from late New York levels of around $1.3686 yesterday.
Greece's ballooning deficit and debt have reverberated across financial markets in recent months, hitting the euro, regional banking stocks and some government bonds, and prompting many investors to pull back from riskier assets worldwide.
Looking ahead, traders will also scour US weekly inventory data from the EIA, which was delayed from Wednesday due to a snowstorm, for further clues on the rate of demand recovery in the world's largest oil user.
A report from the American Petroleum Institute (API) on Tuesday showed US crude inventories jumped by 7.2 million barrels to 337.6 million last week, against expectations of a 1.5 million rise, despite a drop in crude imports.
Gasoline inventories also rose more than expected, up 1.6 million barrels to 228.8 million, exceeding analyst estimates of a 500,000-barrel build.
Offering support to oil prices were signs of higher heating fuel demand as the US Northeast - the world's top consumer of heating oil - began to dig out after two blizzards in a week brought the region to a standstill with record snowfalls.
US heating demand this week is seen 11.5 per cent above normal, weather services said.
Reuters