Oil prices inch higher after dip under 70 dollars
Oil prices nudged upward Monday after a brief dip below 70 dollars for New York crude in Asian trade as the euro struck a four-year low against the dollar, analysts said.
New York's main contract, light sweet crude for delivery in June, tumbled to an intra-day low of 69.82 dollars a barrel but it bounced back to 71.63 dollars at about 1130 GMT, up two cents from its close in the United States on Friday.
Brent North Sea crude for July gained three cents to 77.97 dollars.
The oil market began Monday by extending last week's losses as the euro slumped on persistent fears over eurozone debt.
"(One) factor that has depressed oil prices is the continuing strength of the US dollar against the euro," said David Moore, a Sydney-based commodity strategist with the Commonwealth Bank of Australia.
"Fundamentally, oil markets are not particularly tight and so they were vulnerable to adverse sentiment and that is in fact what has occurred," he told AFP.
A stronger dollar makes dollar-priced crude more expensive for buyers using weaker currencies, denting demand, which leads to lower oil prices.
Moore said prices are likely to fall further as the market was "in a period of volatility and considerable uncertainty."
At current levels, oil prices have fallen by nearly 20 percent since touching a 19-month high of 87.15 dollars on May 3.
The market is also under pressure from rising inventories in the United States, indicating slow demand in the world's largest oil consuming nation.
Elsewhere on Monday, Iraq signed a deal with Chinese energy giant CNOOC and Turkey's TPAO to develop a major southern oilfield complex, its 11th accord with foreign energy firms as Baghdad aims to boost output.
CNOOC and TPAO agreed to be paid 2.30 dollars per barrel of oil extracted from the Maysan cluster of fields, which has proven reserves of 2.6 billion barrels.
Under the deal, output is projected to be ramped up to 450,000 barrels per day (bpd) from current production of around 100,000 bpd.
The Chinese firm will have an 85-percent stake in the joint venture, while TPAO holds the remaining 15 percent. The Iraqi government will have a 25-percent stake in the overall project.
© 2010 AFP