Oil hovers below $78 as traders eye dollar, demand

By ALEX KENNEDY

posted: 2 HOURS 10 MINUTES AGO

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SINGAPORE -Oil hovered below $78 a barrel Tuesday in Asia amid mixed signs about the global economy and crude demand.

Benchmark crude for January delivery was up 16 cents to $77.72 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 9 cents to settle at $77.56 on Monday.

Investor optimism was buoyed by a report Monday from the National Association of Realtors that October home sales rose more than 10 percent, suggesting strength in the U.S. economy. But crude refiner Valero Energy said it shut down a plant last week because demand for oil products such as gasoline has been weak.

Crude has bounced between $76 a barrel and $82 for more than a month as a weakening dollar offsets concerns about tepid consumer demand. Oil often trades inversely to the strength of the dollar as investors buy commodities as a hedge against inflation.

Societe Generale said weakness in the dollar and expectations of higher inflation have provided for a floor for the oil price, limiting losses. "The ceiling has been set by weak refining margins, lackluster demand and a global economic recovery that is expected to be sluggish," it said in a report.

In other Nymex trading, heating oil was steady at $1.98 a gallon. Gasoline for December delivery held at $1.98 a gallon. Natural gas for December delivery was little changed at $4.47 per 1,000 cubic feet.

In London, Brent crude for January delivery rose 20 cents to $77.66 on the ICE Futures exchange.

2009-11-24 01:02:44