Oil hovers below $74 as traders eye dollar, stocks

I / Singapore January 29, 2010, 14:46 IST

Oil prices hovered near a six-week low below $74 a barrel today in Asia amid a strengthening US dollar and a pullback in global stock markets.

Benchmark crude for March delivery was up 10 cents to $73.74 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange.

The contract fell 3 cents to settle at $73.64 yesterday, the lowest since Dec 14 when crude dropped to $73.46.

Oil has skidded about 12 per cent since reaching $84 a barrel earlier this month as investors eye a stronger dollar and slumping equities.

Traders often buy commodities such as oil as a hedge against inflation and a weaker dollar and sell them when the US currency rises.

The euro fell to $1.3930 today in Asia from $1.3972 yesterday while the dollar little changed near 90 yen.

The Dow Jones industrial average fell 1.1 per cent yesterday while most Asian stock markets fell in early today trading.

Investors are also looking at US crude demand, which has so far not rebounded strongly from a slide last year.

"A clear turning point in the US demand cycle is yet to be reached, still waiting for distillate demand to kick in," Barclays Capital said in a report.