Oil declined as the dollar strengthened on Thursday after US Treasury Secretary Timothy Geithner said there was no deliberate policy to devalue the currency, while China's economy slowed in the third quarter.

US crude for December, the front-month contract after November went off the board on Thursday, fell 40 cents to $82.14 a barrel by 0318 GMT, after rising almost 3 per cent on Wednesday. ICE Brent dropped 45 cents to $83.15.

The dollar, the yen and the euro are 'roughly in alignment,' Geithner told the Wall Street Journal in an interview, suggesting there was no need for the greenback to sink further.

China's growth ebbed in the third quarter and inflation edged just a touch higher, showing that the economy was strong but far from overheating and suggesting that an interest rate rise this week, the first in almost three years, may be enough for now.

'The market is uncertain about how a tightening policy in China will impact on growth,' said David Taylor, an analyst at CMC Markets in Sydney. 'The China growth story is crucial to the sustainability of the Asian region.'

'From an energy consumption point of view, China is the world's largest energy consumer and there is nothing to suggest that it is pulling back from that, so it's supportive.”
China's economic growth was a touch stronger than expected at 9.6 per cent, while consumer inflation hit a 23-month high of 3.6 per cent in September, in line with market projections.

Still, for some the numbers in fact constituted a downside surprise after recent market chatter that growth and inflation had been much stronger, prompting the rate increase.

Oil swayed from gains to losses early on Thursday as the dollar strengthened from a 15-year low against the yen on speculation about the size and timing of an expected stimulus to the US economy. The greenback gained 0.26 per cent against a basket of currencies.

A report from influential consultancy Medley Global Advisors said the Fed planned to buy $500 billion of Treasuries over six months and leave itself room for more buying.

Oil on Wednesday posted its biggest daily per centage gain in more than a month, after a slump of more than 4 per cent on Tuesday, when China raised interest rates. Prices reached a five-month high of $84.43 on Oct. 7.

The Reuters-Jefferies CRB index, a global commodities benchmark, gained 2.05 per cent on Wednesday. A day earlier, it fell almost 2 per cent, its biggest one-day loss in 3-½   months.

US crude oil inventories rose last week by a smaller-than-expected 667,000 barrels as imports increased, a weekly report from the federal Energy Information Administration showed on Wednesday.

Distillate stocks were also bullish, falling more than expected, but gasoline inventories surprised analysts with a rise of 1.2 million barrels, weighing on the motor fuel market. – Reuters