--Stronger dollar weighs on dollar-denominated oil
--Slow progress in U.S. deficit talks weighs on investor risk appetite
--Stronger equities, brighter U.S. ADP jobs report offset pressure
--Traders look ahead to EIA inventories data for clues about energy demand
NEW YORK--Crude oil futures traded near unchanged Wednesday as bearish cues from a stronger dollar and caution ahead of U.S. inventories data was offset by firmer equity markets.
Light, sweet crude for January delivery recently traded down 3 cents at $88.47 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange was up 0.2% at $110.05 a barrel.
Oil prices moved sharply lower as floor trading opened in New York, continuing their retreat from a two-week high set Monday as concerns about U.S. deficit negotiations overwhelmed bullish sentiment.
"We're back to focusing on bad news and risk appetite quickly diminishing," said Ray Carbone, president with Paramount Options.
Oil traders have kept a keen eye on Washington's efforts to avert automatic spending cuts and tax increases known as the "fiscal cliff', which some say could push the U.S. economy into recession and curb demand for energy.
"It is apparent that participants are firmly focused on the U.S. fiscal cliff negotiations. In particular, it is the lack of progress in finding a resolution that is weighing on markets," analysts at Standard Bank said in a report.
A stronger dollar added to pressure on dollar-denominated oil prices by making crude futures more expensive for investors who use other currencies.
Firmer equity markets helped offset some of the bearish pressure on oil prices. Equities and crude-oil prices can move in the same direction as both assets are highly sensitive to shifts in economic expectations. The Standard & Poor's 500- stocks index was recently up 0.2% at 1410.39.
Elsewhere, private-jobs in the U.S. increased by 118,000 in November, according to a national report from payroll processor Automatic Data Processing Inc. and forecasting from Moody's Analytics. The brighter data also gave oil traders some support, as employed consumers have more money to spend on gas.
Market attention is now focused the weekly U.S. oil inventory data, set for release at 10.30 a.m. EDT by the Energy Information Administration. The report provides a snapshot of where supplies stood last week.
Crude oil inventories fell by 300,000 barrels in the week ended Friday, according to an average of estimates from 14 analysts. Estimates ranges from a draw of 2.5 million barrels to an increase of 3 million barrels.
By contrast, gasoline inventories are projected to increase by 1.8 million barrels, with all 14 analysts expected an increase.
January-delivery reformulated gasoline blendstock futures, or RBOB, traded 0.54 cent, or 0.2%, lower at $2.6827 a gallon. January heating oil was up 1.32 cents, or 0.4%, at $3.0172 a gallon.
-Write to Tatyana Shumsky at tatyana.shumsky@dowjones.com
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