Even though the Euro and Pound have been strong against the dollar this week, oil prices have fallen below the $77 level in Wednesday morning electronic trading on the New York Mercantile Exchange.

One barrel of benchmark crude oil for August delivery is currently at $76.77, a 38 cent drop from Tuesday’s settle price of $77.15. Oil was up Tuesday by $2.20, in line with gains by the Euro and Pound.

The Euro is now above $1.27 as it continues to rebound from the $1.18 level after the news of the credit crisis spread early last month. The Pound is approaching $1.53 also as concerns about the stability of the US economy increase.

A rise in crude inventory levels is the catalyst that has caused oil prices to dip on Wednesday. According to the American Petroleum Institute, which issued its weekly report late Tuesday, crude inventory levels were up by 1.7 million barrels last week.

In the forecast survey by the McGraw-Hill Companies energy information division, Platts, inventory levels had been predicted to drop by 2.6 million barrels.

The unexpected gain in crude inventories coincides with surprise increases in gasoline levels as well. These increases suggest that there has not been a big influx in demand for oil-based products and fuel in the early summer season.

Ongoing struggles in the employment sector have cause concern in the marketplace, but strong second quarter earnings reports by several companies the last two weeks had bolstered oil prices to start the week.

Among those reporting positive earnings were Intel and Alcoa, with several major corporations set to report their second quarter earnings later in the week.
With no clear direction created by looking at earnings, employment and inventory levels, most top analysts believe that oil prices are likely to remain in the tight $70-80 price range for much of the summer. This is where oil has been for much of the year, in fact.