(RTTNews) - Oil prices were up slightly in early U.S. trading after giving back early gains. Light sweet crude for September delivery moved to $124.58, up 14 cents on the session. Prices hit as high as $126.60 before cooling off.

Crude oil closed lower on Wednesday as traders generally ignored another decline in weekly inventories. Oil lost $3.98 for the session. Prices touched as low as $124.22 in mid-afternoon trading, its lowest level since the early part of June.

The latest inventory report indicated crude oil inventories decreased by 1.6 million barrels in the week ended July 18, according to the weekly report. Experts were calling for a drop of anywhere from 400,000 to 1.9 million barrels. However, gasoline inventories increased by 2.9 million barrels last week and distillate fuel inventories increased by 2.4 million barrels.

Meanwhile, Hurricane Dolly is not expected to cause any lasting damage to the crude oil refineries in the Gulf of Mexico. The storm strengthened to a Category 2 hurricane and hit near the Texas/Mexico. The storm season has yet to cause a major upward movement in energy prices this year.

Oil dropped sharply on Tuesday, which was the final day of the August contract. Prices fell as the dollar gained and forecasters predicted Dolly would spare the oil region. Light sweet crude for August delivery closed at $127.95, down $3.09. Trading on a higher volume count August, September oil fell $3.40 to $128.42 a barrel.

Crude turned higher on Monday amid concerns of violence in Iran and fears of weather problems in the Gulf of Mexico. Oil added $2.16 on the session as traders considered Iran refusal to suspend its nuclear program during weekend talks in Geneva. Last week, oil lost $16.20 a barrel and saw its largest single-day drop in 17 years when it fell $6.44 on July 15.

Thursday morning, the Department of Labor released a report showing that last week's jobless claims jumped to 406,000 from the previous week's revised figure of 372,000. Economists had been expecting claims to increase to 380,000 from the 366,000 originally reported for the previous week.

Wednesday after the metal market closed, traders considered the release of the Beige Book in the afternoon. The Federal Reserve's report indicated the U.S. economy slowed but price pressure has increased over the past six weeks.

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