(Reuters) - Oil hovered near $80 a barrel on Thursday, after earlier hitting a six-week low as fears that Greece's economic crisis may spread to other European nations raised uncertainty over future global energy demand.
The euro fell to a 14-month low, while the U.S. dollar strengthened as skepticism that Greece could deliver on its promises of strict austerity measures dominated financial markets.
A stronger U.S. dollar makes oil more expensive for investors holding alternative currencies.
U.S. crude for June delivery fell 21 cents to $79.76 by 0933 GMT, having earlier slumped to $78.87 a barrel, the lowest intraday price since March 22 when it hit $78.57.
The contract dived more than 3 percent on Wednesday to below $80 a barrel for the first time in six weeks after U.S. government data showed builds in crude stocks.
Technically, $80 still remains a support level and unless U.S. crude can make a significant close below this level there could be a turn to the upside, analysts said.
London Brent crude fell 17 cents to $82.44 a barrel.
The dollar is up as risk appetite has been dampened and prices are adjusting to more realistic levels as earlier this week prices were not backed up by fundamentals, said Carsten Fritsch, oil analyst at Commerzbank in Frankfurt.
More proof of weak demand came yesterday with U.S. data showing crude and products stocks rose.
In Nigeria, Africa's largest oil exporter, Acting President Goodluck Jonathan was sworn in as head of state on Thursday following the death of President Umaru Yar'Adua.
Analysts said his death on Wednesday was unlikely to have an impact on oil production in Nigeria, which has suffered major outages due to attacks on oil facilities in the last five years.
I think with Yar'Adua's death at least the situation is clear now, said Holly Pattenden, head of oil and gas at Business Monitor International.
I don't think it is in militants' interest to cause trouble at this stage and they may well want to give the new administration a chance, Pattenden added.
U.S. jobless claims data due later on Thursday was likely to focus investor attention on the strength of economic recovery in the world's largest energy consumer, after oil inventory data on Wednesday highlighted the fragile state of U.S. fuel demand.
U.S. weekly oil data showed a higher-than-expected build in crude stocks, while gasoline inventories also rose.
Doubts over Greece's ability to carry out tough spending cuts in return for a 110 billion euro aid package from the European Union and the International Monetary Fund sapped risk appetite, helping to push global equities lower.
Japan's Nikkei average .N225 ended down 3.3 percent and Shanghai .SSEC down more than 4 percent on tightening worries, while European stock markets also dipped.
(Additional reporting by Florence Tan in Singapore; editing by James Jukwey)