Oil falls below $98 amid stronger US dollar

[May 23, 2011]  SINGAPORE (AP) -- Oil prices fell to below $98 a barrel Monday in Asia as a stronger U.S. dollar made commodities more expensive for investors with other currencies.

Benchmark crude for July delivery was down $2.35 to $97.75 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.17 to settle at $100.10 on Friday.

In London, Brent crude for July delivery was down $2.39 to $110.00 a barrel on the ICE Futures exchange.

The euro dropped against the greenback to $1.4020 from $1.4201 in late trading in New York on Friday.

Oil has dropped from a 30-month high near $115 a barrel on May 2 amid gains in the dollar and signs that U.S. gasoline demand is waning.

"With a resurgent dollar, weak macro-economic data, and high prices at the pump ... we don't believe the sell-off is over," energy consultant The Schork Group said in a report.

Traders were also closely watching an Icelandic volcano that erupted over the weekend and shut down the country's main airport Sunday. In April 2010, an eruption from another volcano in Iceland prompted aviation officials to close Europe's air space for five days out of fear that the ash could harm jet engines. Thousands of flights were grounded, undermining jet fuel demand.

In other Nymex trading in June contracts, heating oil fell 5.9 cents to $2.86 a gallon and gasoline dropped 3.7 cents to $2.90 a gallon. Natural gas futures slid 1 cent to $4.28 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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