Crude-oil futures fell in Asian trade Friday as investor sentiment weakened considerably after the U.S. Federal Open Market Committee minutes suggested that its stimulus efforts could be withdrawn quicker than expected.
This in turn spurred demand for the U.S. dollar and bonds, market participants said.
The WSJ dollar index, which measures the dollar against a basket of currencies, was last at 71.07 from 70.94 late Thursday in New York.
A stronger dollar is usually bearish for oil prices, as dollar-denominated commodities become more expensive to holders of other currencies when the greenback strengthens.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at $92.25 a barrel at 0636 GMT, down $0.67 in the Globex electronic session. February Brent crude on London's ICE Futures exchange fell $0.62 to $111.52 a barrel.
The FOMC minutes prompted a sharp selloff, a Tokyo-based trader said, adding that uncertainty over the outcome of the U.S. debt-ceiling debate is also bearish for oil prices.
Still, upbeat economic data from China--a rise in China's official non-manufacturing Purchasing Managers' Index for December-- and positive U.S. crude inventory data from the American Petroleum Institute, both released Thursday, will likely support prices, he said, tipping support for the U.S. benchmark at $92/ barrel Friday.
Crude oil inventories fell by 12 million barrels last week, API, an industry group said; analysts surveyed by Dow Jones Newswires had projected a 1 million barrels drop.
The closely watched government survey from the Energy Information Administration is due at 11 a.m. EST Friday, two days later than usual due to the New Year's Day holiday Tuesday.
Any deviation from API's figures will likely prompt traders to adjust their positions accordingly.
Also, keenly awaited is the U.S. non-farm payrolls data, scheduled for Friday, as it will help gauge the health of the world's-largest economy and impact oil prices, participants said.
"We feel that Friday's trade will likely set the tone for next week's price action," Jim Ritterbusch at Ritterbusch & Associates said in a note late Thursday.
Front-month West Texas Intermediate crude futures could hover around the $93/barrel area Friday as a potentially bearish EIA report offsets possibly supportive jobs data, Mr. Ritterbusch said.
Nymex reformulated gasoline blendstock for February--the benchmark gasoline contract--fell 146 points to $2.7831 a gallon, while February heating oil traded at $3.0079, 172 points lower.
ICE gasoil for January changed hands at $929.25 a metric ton, down $6.50 from Thursday's settlement.
Write to Surabhi Sahu at surabhi.sahu@dowjones.com
