Oil prices dipped below $79 a barrel Wednesday as the dollar strengthened and the government said America's crude stockpiles shrank less than expected.
By late morning, benchmark crude for February delivery gave up 11 cents to $78.76 a barrel on the New York Mercantile Exchange. In London, Brent crude for February delivery fell by a penny to $77.63 a barrel on the ICE Futures exchange.
Prices dropped after the Energy Information Administration said crude supplies shrank by 1.5 million barrels last week. Analysts were expecting a drop of 2.2 million barrels.
Futures contracts for natural gas and heating oil have increased this month, also because of the winter storms.
Still, crude has been held in check by a rally in the dollar.
Contracts for benchmark crude are priced in U.S. currency, and as the dollar rises, the contracts become tougher to buy for investors holding foreign money. On Wednesday, the dollar hit a three-month high to the yen and grew by 0.42 percent to the euro in morning trading.
In other Nymex trading, heating oil and gasoline for January delivery both added less than a penny to $2.108 and $2.017 a gallon, respectively. Natural gas for February delivery climbed 2.6 cents to $5.866 per 1,000 cubic feet.