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Oil falls in Asian trade

Oil weakened in Asian trade Friday after strong overnight gains, pushed up mainly by a weak US dollar and good news on the US economic front, analysts said.

business Updated: Oct 09, 2009 08:37 IST

Oil weakened in Asian trade Friday after strong overnight gains, pushed up mainly by a weak US dollar and good news on the US economic front, analysts said.

New York's main contract, light sweet crude for November delivery dropped 31 cents to 71.38 dollars a barrel.

Brent North Sea crude for November delivery tumbled 34 cents to 69.43 dollars.

Both contracts had surged at the close of US trading Thursday as the dollar weakened further against the euro and other currencies.

"Come what may, the dollar has been the major influence on the petroleum prices," said analyst Phil Flynn at PFG Best. Analysts expect the dollar to remain weak in the immediate term, which should lend support to crude prices.

A weak dollar usually boosts crude prices because the dollar-denominated commodity becomes cheaper for foreign buyers holding stronger currencies.

"The market remains bearish on the US dollar, especially against Asian currencies and commodity currencies," analysts from Singapore's DBS bank said in a report.

In late US trading Thursday, the euro rose to 1.4791 dollars against 1.4689 late Wednesday in New York. The single currency at one point bounced briefly above 1.48 dollars, not far from its 12-month high last month.

The US currency in recent days has wobbled on indications its pre-eminence in international financial transactions is coming under sharp scrutiny.

This has sparked a rush into gold, which has hit all-time record highs this week. The New York gold price jumped to a new high of 1,058.48 dollars on Thursday.

Besides the weak dollar, a US government report Thursday also lent support to crude prices.

The US government said Thursday the number of jobless insurance claims in the week to October 3 fell by 33,000 to 521,000 from the previous week's 554,000.

It was much lower than the 540,000 forecast by most economists and the lowest level since January 3, when the number of new claims was 488,000.