FX.co ★ Oil Prices Decline Amid Broad Risk Aversion

Oil prices fell further from three-month highs on Thursday despite data showing a historic drop in U.S. crude inventories.

Benchmark Brent crude futures dropped 0.6 percent to $82.70 a barrel, with a firmer dollar and worries about U.S. fiscal position weighing on prices. WTI crude futures were down 0.4 percent at $79.16.

The dollar is finding support from the risk-off mood triggered by Fitch's unexpected downgrade of U.S. sovereign rating.

Signs of resilience in the U.S. labor market also revived Fed rate hike bets and supported the dollar.

The downside in oil prices remained capped somewhat after a record drop in U.S. inventories indicated a substantial tightening in crude markets.

Data from the Energy Information Administration (EIA) showed on Thursday that crude inventories in the U.S. dropped by 17.049 million barrels in the week ended July 28, substantially larger than an expected drop of just about 1.37 million barrels.

Also, worries about Chinese growth eased somewhat after a private survey China's services sector activity expanded at a stronger pace in July compared to June.