Oil prices steadied near $80 on Thursday after a surprise build in U.S. crude inventories overshadowed an unexpected decline in fuel stocks.

U.S. crude edged one cent lower to $79.93 a barrel by 10:55 a.m. EDT (1455 GMT), taking five-day losses to more than $3 a barrel on a rash of profit-taking from near record highs. A recovering dollar and evidence of weaker U.S. demand have fuelled the pull-back.

London Brent crude rose 23 cents to $77.42 a barrel.

Prices have softened in the wake of yesterday's unexpected build in U.S. crude oil inventories, said Kevin Norrish of Barclays Capital.

U.S. inventory data on Wednesday showed a build in domestic crude supplies of 1.2 million barrels last week, the Energy Information Administration said, confounding analysts' expectations for an 800,000-barrel decline.

The fall overshadowed an unexpected decline in U.S. distillate and gasoline supplies including heating oil, which fell by 1.2 million barrels compared to a forecast of a rise of 1.0 million barrels.

Gasoline stocks also dipped by 100,000 barrels.

Although the end of the peak hurricane season is near, oil traders remain alert for any signs of bad weather.

Thunderstorms associated with a low-pressure system began moving across offshore production areas, but producers and the Louisiana Offshore Oil Port said they had no plans to shut production or evacuate workers.

Oil has traded above $80 for much of the last three weeks despite OPEC's agreement on September 11 to boost output by 500,000 barrels per day (bpd) from November 1. Oil ministers from Venezuela and Qatar have brushed off the need for a further output rise.

OPEC