Oil fell below $77 a barrel on Thursday, dragged down by a stronger dollar and weaker gold prices, which dampened other commodities and outweighed upbeat news on the U.S. economy.

The dollar rose to near nine-month highs on the euro, which was hounded by the sovereign debt woes of Greece and a weak euro zone growth outlook, in contrast to news that Federal Reserve policy makers, confident in the U.S. recovery, aim to begin unwinding stimulus measures soon.

U.S. light, sweet crude ($76.49) for March delivery fell.

London Brent crude ($75.37) for April fell.

"The U.S. dollar has rebounded, as it was pretty much oversold previously," said Peter McGuire, managing director of Commodity Warrants Australia in Sydney. "All the commodities went up on Tuesday evening, but a lot of them took a nosedive."

The U.S. dollar was up by about 0.35 percent against a basket of six major currencies, making oil and other commodities more expensive for holders of other currencies.

The Australian dollar was under pressure on plans by the International Monetary Fund to sell more of its gold holdings. Australia is the world's No.2 gold exporter.

Spot gold dropped below $1,100 an ounce from New York's notional close of $1,106.00. Spot gold had hit a peak of $1,126.85 an ounce on Wednesday ahead of the IMF statement, its highest since Jan. 20.

"Gold was off nearly $20 from a high, and that probably floated a little across to the crude market," said McGuire. He added that crude prices will be within the $72-$79 a barrel band in the short term.

But other analysts are more optimistic, saying that demand? for crude is expected to stay strong due to the recovery underway in Asia and the United States.

"The demand profile remains robust, with growth outpacing supply-side additions," Barclays Capital said in a report. "With even the middle of the barrel likely to show some relative improvement in the second quarter, the likely price momentum remains skewed to the upside, in our view."

Barcap added that the trading range should start to move up, with $80 per barrel transitioning from being an effective ceiling to becoming an effective floor.

"The level of floating crude inventories not in transit continues to fall and should become insignificant over the next couple of months," it added.

But in the short haul, oil prices may not see any major upward movement as distillates stockpiles held on tankers remained a worry despite the recent falls, other traders said.

U.S. crude inventories edged down unexpectedly by 63,000 barrels last week — versus forecasts for a 2.2 million-barrel rise — as refineries increased activity, data from industry group American Petroleum Institute showed.

Gasoline inventories rose 1.4 million barrels, while distillates — which include heating oil and diesel — rose 1.3 million barrels.

The U.S. Energy Information Administration's oil inventory report will be published on Thursday at 11 am New York time.