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Oil hovers around $76 in Asian trade

Oil prices were down in Asian trade today as a surge in US crude reserves and the dollar's strength against the euro curbed demand, analysts said.

world Updated: Jul 22, 2010 10:53 IST

Oil prices were down in Asian trade on Thursday as a surge in US crude reserves and the dollar's strength against the euro curbed demand, analysts said.

New York's main contract, light sweet crude for delivery in September, shed 21 cents to $76.35 a barrel, while London's Brent North Sea crude for September was down eight cents at $75.29.

"Oil is trading closer to 77 dollars and where it is at the moment, it's partly because the US dollar has probably gained a bit overnight against the euro," said Peter McGuire, managing director of CWA Global Markets in Sydney.

A strengthening dollar makes dollar-priced crude more expensive for holders of weaker currencies.

But McGuire said oil was likely to trade on the upside in the near term due to concerns that bad weather could affect petroleum production in the United States, where a hurricane season is underway.

"We are probably looking at the market trending a little bit higher from here due to uncertainties as far as the weather situation with the hurricanes," McGuire told AFP. "That has always priced in a little bit of a premium."

An unexpected increase in American crude oil reserves also impacted oil prices after the US Department of Energy said crude reserves had risen 400,000 barrels in the week ending July 16, indicating weak demand.

The market had expected a large drop of 1.3 million barrels, according to analysts polled by Dow Jones Newswires.

"When the inventories go up, oil goes down so that tends to weigh in as well," McGuire said.