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| Oil hovers below $79 after 3 day slide |
| AP/PTI / Singapore Oct 27, 2009, 12:07 IST |
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Oil prices lingered below $79 a barrel today in Asia after three days of losses as investors eyed a volatile US dollar.
Benchmark crude for December delivery rose 12 cents to $78.80 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange.
The contract fell $1.82 to settle at $78.68 yesterday.
Crude jumped to a 12-month high at $82 a barrel last week as the dollar weakened amid concerns that massive global stimulus spending will eventually spark inflation.Since oil is priced in dollars, a drop in the US currency makes it cheaper to international investors.
The euro touched a 14-month high of $1.5061 on Monday before closing at $1.4861. The euro strengthened slightly to $1.4882 in early Asian trading while the dollar fell to 92.06 yen from 92.21.
"A weakening dollar could put significant pressure on dollar-denominated oil prices in the months ahead," Bank of America Merrill Lynch said in a report.
"The combination of surging money supply, a rapidly weakening dollar and a cyclical improvement in oil demand could push oil prices above $100."
Some economists, such as Jorg Zeuner of Liechtenstein- based VP Bank, expect the dollar and oil to stabilise over the next three to six months as inflation fears ease.
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