Oil price dips as dollar strengthens, demand weakens

Oil prices retreated slightly on Thursday after gaining more than $3 in the prior session, with a strong dollar capping oil demand from buyers using other currencies and concerns over the faltering economic outlook clouding market sentiment.

Brent crude futures fell 41 cents, or 0.5%, to $88.91 per barrel by 0337 GMT while US crude futures dropped by 35 cents, or 0.4%, to $81.80.

Both benchmarks had rebounded in the prior two sessions after reaching nine-month lows this week after a temporary dive in the dollar index and a larger-than-expected drawdown of US fuel inventory raised hopes of a consumer demand recovery.