Oil was mixed in Asian trade Thursday as weak US energy demand kept a lid on prices despite a weak dollar.
New York’s main contract, light sweet crude for November, was up 13 cents to 74.84 dollars a barrel in afternoon trade and Brent North Sea crude for delivery in November was off 16 cents at 77.79 dollars.
Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore, said prices should normally rally because of the weak dollar which makes the dollar-priced commodity cheaper to holders of other currencies.
But an unexpected rise in US crude inventories, which reflects soft energy demand in the world’s biggest economy, has put a dampener on oil prices, he added.
The US Department of Energy announced Wednesday that crude stockpiles climbed by one million barrels last week, against analyst expectations for a drop of 1.7 million barrels.
“On the one hand, we have the US inventory report which is putting downward pressure on oil prices. On the other hand, we have the weak US dollar supporting pricing,” Shum told AFP.
The dollar has been under pressure after the US Federal Reserve said it was prepared to take new stimulus measures if necessary to keep the US economy on track while leaving interest rates at record lows.
The US central bank said the pace of the US economic rebound from recession had slowed in recent months.
“I think that the concerns about the economic recovery in the US will put oil no higher than the mid-70s (dollar level) in the short term,” Shum said.
“With unemployment still at 9-10 percent in the US, consumer confidence and sentiment will be weak. It will be difficult to sustain oil at above 75 dollars under this environment.”