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Oil edges up as dollar weakens

business Updated: May 31, 2010 09:35 IST

AFP
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Oil prices edged higher in Asian trade on Monday as the dollar weakened against the euro, spurring investor demand for crude futures, analysts said.

New York's main contract, light sweet crude for delivery in July, added 37 cents to 74.34 dollars a barrel while Brent North Sea crude for July was up 44 cents to 74.46 dollars.

"The oil market continues to take its directions from the financial sector," said Victor Shum, an analyst with energy consultancy Purvin and Gertz.

"The US dollar has weakened versus the euro and we see a small increase in the oil pricing correspondingly," he told AFP.

In Asian trade, the euro bought 1.2306 dollars from 1.2266 dollars in New York trade late Friday.

A weaker US currency makes dollar-priced oil cheaper for holders of stronger currency units, which tends to stimulate demand and lift prices.

News that Fitch Ratings had downgraded the sovereign debt of Spain to AA+ from its top AAA rating sent prices retreating on Friday after recovering stock markets and positive data on the US energy market helped boost sentiment.

With markets in the United States and Britain closed for a public holiday on Monday, trading is expected to be thin, said Moore.

Moore added investors will eye data from the Institute for Supply Management on Tuesday for the pace of manufacturing growth in the US to gauge the impact of the eurozone debt woes on the world's largest economy and oil consumer.