Oil prices held near $73 a barrel Tuesday in Asia as investors eyed a weakening U.S. dollar and looked to commodities for protection against possible inflation.
Benchmark crude for November delivery was down 28 cents at $72.99 by midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract gained $1.50 to settle at $73.27 on Monday amid expectations of stronger demand during the U.S. winter.
Crude has shuffled between $65 and $75 for months as traders mull signs of an uneven economic recovery and consumer demand.
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The dollar has slid over the last month on concern that massive stimulus spending designed to spark economic growth will eventually trigger inflation.
“We expect commodity prices to be heading north over the next 12 months as a hedge against inflation,” said Melvyn Boey, deputy director of Asian equity research for Bank of America Merrill Lynch. “That includes oil and gold down to soft commodities such as palm.”
The euro was little changed at $1.4715 in Asian trading while the dollar rose to 89.93 yen from 89.80.
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“The U.S. dollar has weakened considerably over the last four weeks and we don’t expect that trend to reverse,” Boey said. “If you look at it, they (the U.S.) are printing money.”
In other Nymex trading, heating oil was steady at $1.89 a gallon. Gasoline for November delivery held at $1.80 a gallon. Natural gas for November delivery was steady at $4.88 per 1,000 cubic feet.
In London, Brent crude fell 27 cents to $71.09 on the ICE Futures exchange.