Singapore, August 06: Oil retreated modestly in Asian trade on Thursday after overnight gains that were fuelled by the weakening dollar, analysts said.
New York’s main contract, light sweet crude for September delivery eased 32 cents to USD 71.65 a barrel. Brent North Sea crude for September delivery dropped 37 cents to USD 75.14 barrel.
Both contracts closed stronger yesterday as investors returned to commodities including oil, drawn by the weakening US currency which makes crude futures an attractive investment option.
Crude futures are priced in the US currency and become cheaper when the dollar falls.
The euro surged from USD 1.40 last Friday to above USD 1.44, climbing to its highest level since December at USD 1.4445 on renewed hopes of a global economic recovery. In late Wednesday US trade, the euro traded at USD 1.4411.
The dollar is seen as a safe-haven currency and tends to do better during times of economic uncertainty, while the riskier euro generally rises when investors feel upbeat about the global economy.
“The US currency has come under pressure from the rise in oil prices, although we expect the latter to fall back,” analysts from London-based Capital Economics consultancy said.
–Agencies