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SINGAPORE: Oil prices fell in Asian trade Thursday on a stronger US dollar after the US Federal Reserve reaffirmed its policy of keeping interest rates at near zero.
New York's main futures contract, light sweet crude for delivery in August, shed 15 cents to 68.52 dollars a barrel.
Brent North Sea crude for August delivery declined 16 cents to 68.17 dollars.
The dollar's performance is a key factor in the oil market because a stronger greenback makes the dollar-priced commodity more expensive for holders of other units, dampening demand and leading to lower prices.
The dollar had a boost after the policy-making Federal Open Market Committee of the US central bank left the base federal funds rate in a range of zero to 0.25 per cent, saying the recession was easing although the economy would remain weak for some time.
Earlier, the greenback was bolstered by a surprisingly strong reading on US durable goods orders, a positive sign for the manufacturing sector and the overall economy.
Conflicting signals about the strength of a recovery for the recession-hit global economy have led to volatile swings in oil prices recently, with some analysts saying prices were recovering too fast amid weak demand.
Capital Economics said Thursday that world trade, which has been hard hit by the economic crisis, "may be close to stabilising... but there are few signs yet of a meaningful recovery."
The London-based research house said it now expects merchandise trade volumes "to fall by around 15 per cent in 2009 as a whole, with only a partial rebound over the next two years."
Crude oil futures plunged from record peaks of more than 147 dollars in July 2008 to about 32 dollars in December as the economic downturn ravaged energy demand but the market has since clawed back ground on recovery hopes.
The market meanwhile also remains gripped by post-election violence in key crude producer Iran.
Analysts are concerned that a worsening of the crisis could cause the Iranian government to cut off oil supplies or block the Strait of Hormuz and choke a vital passageway for oil tankers.
- AFP/yt
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