NEW YORK (AP) -- Oil prices slid below $80 a barrel Wednesday after China moved to curb bank lending and a report showed an unexpected jump in U.S. inventories of distillates and gasoline.
By early afternoon in Europe, benchmark crude for February delivery was down 91 cents to $79.88 a barrel in electronic trading on the New York Mercantile Exchange. On Tuesday, the contract fell $1.73 to settle at $80.79.
Oil prices rose to a 15-month high near $84 a barrel earlier this week amid expectations a spell of bitter cold in parts of the U.S., Europe and Asia would boost demand for oil distillates such as heating oil.
But data released late Tuesday by the American Petroleum Institute showed distillate inventories increased 3.6 million barrels last week, while analysts had expected a drop of 1.7 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
Gasoline supplies jumped 6.8 million barrels and crude stocks rose 1.2 million, the API said. The Energy Department's Energy Information Administration plans to announce its inventory report -- the market benchmark -- later Wednesday.
China's decision Tuesday to raise the proportion of deposits that banks must hold in reserve also weighed on crude prices. China's growing economy and appetite for oil has helped prices jump from $32 a barrel in December 2008, and a tighter monetary policy could signal slower growth.
"This measure, which is aimed at containing inflation, prompted concerns that slower economic development could hamper oil demand," said JBC Energy in Vienna.
A weaker dollar helped keep a floor under oil prices, making dollar-priced crude cheaper for investors holding other currencies.
The euro rose Wednesday to $1.4551 from $1.4497 late Tuesday in New York, while the British pound rose to $1.6271 from $1.6179.
In other Nymex trading in February contracts, heating oil fell 2.85 cents to $2.1033 a gallon and gasoline dropped 3.09 cents to $2.0669 a gallon. Natural gas futures skidded 7.8 cents to $5.513 per 1,000 cubic feet.
In London, Brent crude for February delivery fell 85 cents to $78.45 a barrel on the ICE Futures exchange.
Associated Press writer Alex Kennedy in Singapore contributed to this report.