Oil stays below 83 dollars in Asian trade

SINGAPORE, Jan 8, 2010 (AFP) - Crude prices were down in Asia Friday due to a stronger dollar and signs of easing energy demand in the United States, the world's biggest oil consuming nation.

New York's main futures contract, light sweet crude for February delivery, fell 29 cents to 82.37 dollars a barrel in the afternoon. The contract topped 83 dollars on Wednesday for the first time in 14 months.

Brent North Sea crude for February delivery eased 46 cents to 81.05 dollars.

"The weakening of the US dollar was something that helped oil rally over mid-December. As the US dollar strengthens that has an opposite effect on oil prices," said Ben Westmore, a minerals and energy economist for the National Australia Bank in Melbourne.

The dollar firmed after Japan's new finance minister, Naoto Kan, spooked financial markets with a call for a weaker yen, raising speculation about government intervention in the market.

"Trade in oil is reasonably thin so we're not reading too much into the price movements but in terms of the daily movement a lot of it has to do with the US dollar," Westmore added.

A stronger dollar often tends to dampen demand for dollar-priced crude oil and other commodities as they become more expensive to holders of weaker currencies.

US energy inventory data showing easing demand in the world's biggest economy also helped push down prices, analysts said.

"Part of the downward correction... in the oil prices has to do with the high level of stockpiles at the moment and the fact that the outlook for global growth is still reasonably uncertain," Westmore said.

A weekly report by the US Department of Energy (DoE) released Wednesday showed that crude oil reserves rose by 1.3 million barrels in the week ending January 1, instead of the expected drop of some 300,000 barrels.

Stockpiles of distillates -- including heating fuel and diesel -- fell by 300,000 barrels in the week, sharply below the average analyst forecast of a drop of 1.8 million barrels amid cold weather across sections of the US.

Source: AFP

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