SINGAPORE (AP) — Oil prices steadied Tuesday after jumping by almost $3 a barrel in the previous session on concerns about falling gasoline supplies and expectations that U.S. interest rates will be cut again.
Oil prices climbed Monday as traders bet that future U.S. Federal Reserve rate cuts will weaken the greenback. A weak dollar attracts investors to hard commodities such as oil, which are seen as a hedge against inflation. Also, a falling dollar makes oil cheaper to overseas investors.
"What we're seeing at the moment is still a very high interest in commodities, driven by non-fundamental issues such as a hedge against the falling U.S. dollar," said Mark Pervan, senior commodity strategist with the ANZ Bank in Melbourne.
Light, sweet crude for May delivery lost 24 cents to $108.85 a barrel in Asian electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract rose $2.86 overnight to settle at $109.09 a barrel on the Nymex, the highest settlement for a front-month contract since March 18.
Oil futures are now nearing last month's trading record of $111.80 a barrel after a swoon that twice brought them briefly below $100. The rise is helped by a growing belief that gasoline supplies are falling as the summer driving season in the U.S. approaches.
By GILLIAN WONG – 4 hours ago
NVDL: This is in line with predictions made earlier on this blog that oil in the middle of the year will straddle a band of $110-$120.