August 25, 2009
SINGAPORE (AFP) - Crude prices were hovering below 74 dollars in Asian trade Tuesday as oil markets eased off 10-month highs, driven by a strengthening US dollar and dips in Asian equity markets, analysts said.
New York's main contract, light sweet crude for October delivery, was down 39 cents to 73.98 dollars a barrel in morning trade.
Brent North Sea crude for October delivery was down 27 cents to 73.92 dollars.
"Fluctuations in equities markets and currency markets continue to impact oil," said Victor Shum, senior principal of Purvin and Gertz energy consultants in Singapore.
Shum pointed to a morning dip in the Nikkei index in Japan as an influencing factor in Asian oil prices, and added that the strengthening of the US dollar against the euro caused oil prices to edge down.
Japanese share prices fell 0.78 percent in morning trade as investors took profits a day after a strong rally driven by mounting optimism on the global economic picture.
Crude prices continued to fall after a pre-weekend surge last week and Shum warned that the market would remain fickle in the near term.
"The uncertainties in the prospects of economic recovery are going to continue to make oil volatile," he said.
Analysts were also wary of oil prices due to the existing weak fundamentals with US inventories still relatively high amid uncertain demand.
"Longer term, we still see the downside correction will end up being greater than the upside move," said Phil Flynn, energy analyst at PFGBEST, a US futures commission merchant.
