By Polya Lesova & Myra P. Saefong, MarketWatch
FRANKFURT (MarketWatch) -- Crude-oil futures traded little changed on Friday, paring most of their earlier losses, as the U.S. dollar declined after data showed consumer prices rose last month.
Crude for March delivery fell 7 cents to $78.99 a barrel in electronic trading on Globex.
The contract earlier had hit an intraday low of $77.76.
Oil prices erased nearly all of their losses after the Labor Department estimated that the consumer price index rose a seasonally adjusted 0.2% in January for the fifth straight month.
U.S. core consumer prices, which exclude food and energy costs, fell a seasonally adjusted 0.1% in January, the first decline since 1982.
The dollar fell versus major counterparts following that data.
The dollar index (DXY 81.05, +0.65, +0.81%) , which measures the U.S. unit against a trade-weighted basket of six major currencies, fell 0.2% to 81.028.
The latest decline in the dollar is a reversal from its move higher in the wake of the U.S. Federal Reserve's surprise hike in its discount rate late Thursday. See Currencies.
"I do find that oil moves in the opposite direction to the value of the dollar," said Charles Perry, president of energy-consulting firm Perry Management.
"However, oil moves a lot for very little change in the dollar," he said, estimating that oil prices change about $1 when the dollar moves maybe only 1 cent.
"Change in the two are not proportional," Perry said.
The Fed said its 25-basis-point hike of the discount rate to 0.75% was to encourage banks to borrow more from the private market, and cautioned this was not a tightening of its monetary policy. See full story on Fed's discount rate hike.
On Thursday in New York, crude-oil futures gained 2.2% to finish above $79 a barrel, with news of a drop in U.S. distillate inventories helping offset rising crude supplies and a mixed batch of economic reports. See Thursday's Futures Movers story.
