Oil prices fell by more than $1 a barrel this evening, breaking a five-day rally, after the dollar jumped against the euro. US crude fell $1.30 to $79.01 a barrel, while Brent crude fell $1.24 to $77.37.
The dollar started rising against the euro after an unexpected fall in Germany's Ifo business sentiment index raised questions over the health of Europe's biggest economy.
Commodities prices tend to move in the opposite direction to the US currency because many of them are priced in dollars.
Analysts said the market was also on edge ahead of US oil stockpiles data, which was expected to show a rise of 1.9 million barrels in crude oil inventories, the fourth weekly rise in a row as imports continued to increase.
Total pledge in bid to end strike
Meanwhile, French oil company Total has pledged not to close or sell any French refineries other than its Dunkirk plant for five years, clearing the way to end a week-long strike that has embarrassed the government ahead of key March regional elections.
Europe's biggest refiner is instead planning to sell its UK refinery, industry sources said. This, combined with a permanent closure of Dunkirk, will allow it to meet a target to cut production 500,000 barrels per day by 2011.
Workers at Total's six French refineries have been on strike for seven days, bringing production to a halt, triggering panic buying in some petrol stations and prompting the intervention of French President Nicolas Sarkozy.
'Total has decided to make a firm commitment and maintain all refineries, apart from Dunkirk, during the next five years,' Industry Minister Christian Estrosi told parliament.
Estrosi added the government was ready to organise a round table on the future of the French refining industry, meeting the the final demand unions had made before calling on workers to stop the strike.
