London (Platts)--4Feb2010/641 am EST/1141 GMT

Crude futures were lower in European morning trading Thursday, curtailing a three-day rally that saw the ICE Brent contract trade close to $77.00/barrel, as a stronger dollar and weaker equity markets helped push oil values below overnight settles.

Adding to the downward pressure was a bearish set of US Energy Information Administration data released Wednesday. "The EIA stats were slightly bearish which has halted the rally," a source said.

"There's still plenty of potential for the market to move higher. I see the $78-79/b range as the top end with $72-73/b at the bottom of the potential trading range," the source added.

At 11:07 GMT, the front-month ICE Brent contract traded at $75.21/barrel, a $0.71 fall from the overnight settle. The NYMEX WTI contract meanwhile traded at $76.29/b, a $0.69 fall.

In the currency markets, the US Dollar Index rose to its highest level since July 15, 2009, reaching 79.715. The euro rate meanwhile traded at its lowest level against the dollar since June 2009 at $1.3825. The weakness in the euro was linked to growing concern over EU countries' deficits.

"We suspect that the bias in energy will be lower over the next two days, particularly if the dollar continues to regain its footing, as it seems to be doing over the past 24 hours," energy analyst Edward Meir said in an MF Global report.

"In addition, we believe that the energy complex has had a good run higher earlier this week on mostly exogenous variables, and we could now be in a position to roll back some of these gains."

On Wednesday, the EIA reported a 2.317 million barrel build in US crude stocks, in contrast to analysts' expectations for a 1 million barrel draw. The EIA also reported an unexpected gasoline stock draw of 1.306 million barrels, against expectations for a 1.5 million barrel build, according to a Platts survey of analysts, as well as a 948,000 barrel draw in distillates. A 1.2 million barrel draw had been anticipated.

--George Johnson, george_johnson@platts.com