Brent, US crude fall

Crude oil futures fell in choppy trading on Thursday, following Wall Street lower after the US Federal Reserve Chief gave a speech that lacked new steps to spur economic growth, and as the dollar rose sharply. In early trade, oil dipped on data showing many more Americans than expected filed new claims for jobless benefits, stoking worries about the economy.
Oil then rose to session highs after government data showed US crude inventories fell much more than expected last week and on prospects of more bad weather in the Gulf of Mexico. In London, Brent crude for October delivery settled at $114.55 a barrel, falling $1.25, after extending the day's low to $114.20. Its session high was $116.60, the highest for front-month Brent since August 2.
US October crude settled at $89.05, slipping 29 cents, dropping from a session high of $90.23, which was below its Wednesday high of $90.48. It fell as low as $88.59. Brent's premium against US crude, also known as West Texas Intermediate, narrowed to $25.50 at the close, from $26.46 on Wednesday. The premium hit an intraday record of $27.23 on Tuesday.
"The dollar rose against the euro and that pulled down US equities, dragging crude futures lower." said Tom Knight, trader at petroleum product marketeres Truman Arnold in Dallas, "Crude rose on the inventory drawdown earlier ... a deeper sell-off is being prevented by fears that Tropical Storm Nate may head to areas in the Gulf of Mexico where there are production sites." Knight added.
The euro slid on signals from the European Central Bank of intensified risks to eurozone growth. The dollar rose further against the single currency fell deeper as Fed Chief Ben Bernanke pledged to help shore up the US economy, although he did not specify what action the Fed would take. Wall Street fell back after Bernanke's comments as investors were disappointed he did not offer details on what measures Fed policymakers would pursue.
Traders were cautious ahead of a speech by US President Barack Obama before the US Congress that will call for urgent steps to spur the economy and create jobs. Obama is scheduled to speak at 7 pm EDT (2300 GMT) and is expected to lay out a $300 billion jobs plan. Earlier, European Central Bank President Jean-Claude Trichet underlined risks to the economy at a press conference following the ECB's decision to keep interest rates steady, as expected.
The US Energy Information Administration said commercial crude oil inventories fell nearly 4 million barrels last week, far deeper than the forecast for a 1.9 million barrel drawdown. Inventories dropped as imports slid more than 1 million barrels per day with offloadings hampered by Hurricane Irene's passage through the East Coast that also compelled refineries to cut utilisation rates by more than a quarter.