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Page added on November 24, 2009

Oil trading around $78, speculators eye US dollar, oil demand

Oil prices are trading around the $78 a barrel mark on Tuesday in Asia amid mixed signs about the global economy and crude oil demand.

Benchmark Light crude oil futures for January delivery was up 16 cents to $77.72 a barrel at midday Singapore time in electronic trading on the NYMEX, while in London, Brent crude oil futures for January delivery rose 20 cents to $77.66 on the ICE Futures exchange.

Investor optimism was buoyed by a report Monday from the US National Association of Realtors that October home sales rose more than 10 percent, suggesting strength in the US 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 oil prices have bounced between $76 a barrel and $82 for more than a month as a weakening US dollar offsets concerns about tepid consumer oil demand. Oil often trades inversely to the strength of the US dollar as investors buy commodities as a hedge against inflation.

Societe Generale said weakness in the US 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.