Oil hovers below $78 as traders eye US dollar

AP

SINGAPORE: Oil prices hovered below $78 a barrel Friday in Asia as investors eyed a volatile U.S. dollar and mixed economic data.

Benchmark crude for December delivery was up 11 cents to $77.57 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract, which expires later on Friday, gave up $2.12 to settle at $77.46 on Thursday.

Oil has seesawed between $76 a barrel and $82 for about a month as the dollar — whose fall this year has help boost crude prices from $32 in December — stabilized somewhat during the last few weeks. Investors often buy commodities such as oil as a hedge against a weaker dollar and inflation.

The euro fell to $1.4900 from $1.4922 late Thursday in New York while the dollar slipped to 88.88 yen from 88.98.

"We view this sideways pattern as sustainable going forward through the balance of this year," said Galena, Illinois-based Ritterbusch and Associates said in a report.

"But, bearish oil fundamentals that are showing negligible sign of improvement will accentuate downside price moves in response to a strengthening dollar while dampening upside reaction to a weakening dollar."

On Thursday, the U.S. Labor Department said employers are still shedding jobs, and the Mortgage Bankers Association reported a surge in foreclosures. However, some analysts expect Asian economic growth, led by China, to help offset a sluggish recovery in developed countries.

In other Nymex trading, heating oil was steady at $2.00 a gallon. Gasoline for December delivery held at $1.98 a gallon. Natural gas for December delivery was steady at $4.34 per 1,000 cubic feet.

In London, Brent crude for January delivery rose 36 cents to $78 on the ICE Futures exchange.