Oil hovers above $71 amid weak demand, US dollar

[September 23, 2009]  SINGAPORE (AP) -- Oil prices hovered above $71 a barrel Wednesday in Asia as signs of weak crude demand were offset by a slumping U.S. dollar.

Benchmark crude for November delivery was down 6 cents at $71.70 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract added $1.83 a barrel to settle at $71.76 on Tuesday.

Oil prices have traded between $65 and $75 for months as consumer demand in the U.S. has remained tepid despite evidence of an economic recovery.

U.S. oil inventories rose unexpectedly last week, the American Petroleum Institute said late Tuesday. Crude stocks increased 276,000 barrels while analysts had expected a drop of 2.25 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

"The reason oil is trading in this range is this battle between weak supply fundamentals and optimism for economic recovery," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.

"This seems to be a level that both producers and consumers are happy with."

A weakening U.S. dollar has helped support oil prices. The euro rose Wednesday in Asian trading to $1.4817 from $1.4788 the previous day while the dollar fell to 90.68 yen from 91.15.

In other Nymex trading, gasoline for October delivery was steady at $1.77 a gallon, and heating oil held at $1.81 a gallon. Natural gas was up 3.2 cents to $3.64 per 1,000 cubic feet.

In London, Brent crude fell 13 cents to $70.40 on the ICE Futures exchange.

[Associated Press; By ALEX KENNEDY]

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