London (Platts)--28Oct2009/719 am EDT/1119 GMT

The ICE Dollar index, equity bourses and the crude futures market continued to retrace a familiar path Wednesday as a stronger dollar placed downward pressure on the crude futures complex. The ICE Dollar index traded higher for a fourth consecutive session, having closed the day on Tuesday at a two-week high. Equity bourses meanwhile edged lower.

"The risk/reward of trading the direction of oil independently of the exogenous markets when the correlations are so high remains very poor and trading oil without a tick by tick look at equities and the dollar should continue to be avoided," energy analyst Olivier Jakob said in a Petromatrix report.

"The problem remains that when asset classes that are supposed to act somewhat independently trade such a strong correlation, we come to a situation where no single market knows exactly what it is pricing."

At 1107 GMT, the front-month ICE Brent contract traded at $77.28/barrel, a $0.64 fall. The NYMEX WTI contract also lost value, trading at $78.94/b, a $0.61 fall. The ICE Dollar index meanwhile added to Tuesday's gains trading at 76.248, a 0.113 point rise.

Overnight the American Petroleum Institute issued its report showing a 3.5 million barrel draw in crude stocks, as well as draws of 255,000 and 671,000 barrels for gasoline and distillates.

"The API data was surprising. Theoretically the crude market should be up, but demand is still not as strong, US stocks remain high, the dollar is stronger and equity markets are lower. We could be in for a proper down-day," a London-based broker said.

The market is also awaiting the US Energy Information Administration weekly stock report due later Wednesday, with analysts polled by Platts expecting a 900,000 barrel build in crude stocks, and draws of 1 million barrels and 1.1 million barrels for gasoline and distillate inventories, respectively.

"It should be an interesting 24-36 hours leading up to Thursday's US GDP report, which we suspect could prove to be something of an inflection point for most commodity markets, especially if the dollar strengthens on the data," energy analyst Edward Meir said in an MF Global report.

--George Johnson, george_johnson@platts.com