Singapore: Oil steadied above $70 a barrel on Tuesday as the dollar slid after Russia said the world needed new reserve currencies, while stock market declines weighed on sentiment for economic recovery.
Russian President Dmitry Medvedev said the world needed new reserve currencies a day after the finance minister said the dollar’s status as the world’s main reserve currency would unlikely change in the near term.
US crude inched down 3 cents to $70.59 by 1:54pm, after falling below $70 earlier in the day when the dollar was stronger. London Brent crude fell 1 cent to $70.23.
Optimism over an economic recovery drove crude prices to a near eight-month high above $73 a barrel last week.
The Bank of Japan held its interest rate at 0.1% and upgraded its economic assessment for the second straight month as rising exports and output raise expectations the worst of the recession is over.
Australia’s central bank too saw no “pressing need” to cut interest rates given signs of stabilisation at home and abroad.
But Asian stock markets painted a bleaker picture, with Japan’s Nikkei down 2.9% and a broad measure of regional shares down 1.4%, as investors worried a strong rally from March lows had run ahead of corporate prospects.
Traders will look out for weekly US government inventory data on Wednesday, which is expected to show a 1.8 million-barrel fall in crude oil stocks, a 600,000-barrel rise in gasoline stocks and 900,000-barrel rise in distillate stocks, based on a preliminary Reuters poll.
The American Petroleum Institute (API) will issue its report later in the day.
With oil rising almost $20 since the end of April, there were concerns that speculation in the market had pushed oil prices up too high, too fast.
Opec secretary general Abdullah al-Badri said a too-quick rise in oil prices could harm a global economic recovery, though a price of $80 a barrel would not stem growth.
The head of the International Monetary Fund, Dominique Strauss-Kahn, also sounded a cautious note, saying the worst of the global crisis was not yet over.