SINGAPORE (AP) — Oil prices hovered near $80 a barrel yesterday in Asia as traders mull a surging dollar and rising US crude inventories.
Benchmark crude for June delivery was up 17 cents to $80.14 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The June contract lost $2.77 to settle at $79.97 on Wednesday.
Crude has dropped eight percent from an 18-month high of $87.15 a barrel earlier this week as an escalating debt crisis in Europe undermined confidence in the euro. Commodities priced in dollars, such as oil, become more expensive for investors holding euros as the US currency strengthens.
The euro rebounded slightly from a 14-month low, rising to $1.2836 yesterday from $1.2823 the previous day while the dollar was little changed at ¥93.92.
“The market is realizing the problem in Europe is not easy to fix,” said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore. “If the euro collapses, that’s really going to push crude down.”
Signs of tepid US crude demand also weighed on oil prices. The Energy Information Administration said Wednesday that crude inventories rose by 2.8 million barrels last week while analysts had expected an increase of only 1.5 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
Inventories of gasoline and distillates also rose.
In other Nymex trading in June contracts, heating oil rose 0.55 cent to $2.190 a gallon, and gasoline gained 0.46 cent to $2.225 a gallon. Natural gas fell 1 cent to $3.981 per 1,000 cubic feet.
In London, Brent crude was up eight cents at $82.69 on the ICE futures exchange.