Oil hovers above $68 a barrel

SINGAPORE - Oil prices hovered above $68 a barrel Wednesday in Asia near a seven-month high as investors sought a safe haven in commodities from a weaker US and inflation.

Benchmark crude for July delivery was up 9 cents to $68.64 a barrel by midday in Singapore in electronic trading on the New York Mercantile Exchange. On Tuesday, the contract slipped 3 cents to settle at $68.55.

Oil prices have doubled since March amid signs that the worst of a severe recession in the US may be over. Some investors are also concerned that the massive fiscal and monetary stimulus package unleashed this year will spark inflation and undermine the dollar, which has fallen sharply against the euro.

“This is not so much driven by the expectation of an economic recovery, but to new money seeking an inflation hedge,” said Marius Botha, who helps manage a commodities hedge fund for London-based Threadneedle.

Investors will be watching for the weekly petroleum inventory data from the Energy Department’s Energy Information Administration on Wednesday for signs crude demand may be growing.

Analysts expect a fall of 2 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Stocks dropped last week for a third straight week after rising for the previous 10 weeks.

“With U.S. and European crude oil and product inventories at their highest levels in almost 20 years, oil is currently showing extremely bearish fundamentals,” Botha said.

In other Nymex trading, gasoline for June delivery was steady at $1.92 a gallon and heating oil fell 1.54 cents to $1.78 a gallon. Natural gas for June delivery slid 1.4 cents to $4.11 per 1,000 cubic feet.

In London, Brent prices rose 6 cents to $68.23 a barrel on the ICE Futures exchange.